Fixed margin price undercutting: An adequate entry strategy in a market with switching costs?

Purpose We try to determine the best strategy for entering a market with switching costs that is initially served by a monopolistic incumbent. Findings We show that an offer to undercut the incumbent by a fixed margin (FM) dominates traditional entry with a binding price offer (BO) as this conditional pricing strategy restrains the ability of the incumbent to block entry by limit pricing. Combining FM with a price ceiling (PC) insures customers against future price increases and turns out to be optimal for markets with elastic demand as long as cost uncertainty is not an issue. Conclusion Using a more elaborate entry strategy may facilitate entry in markets with switching costs. However, as these strategies may decrease welfare, they should be closely monitored by antitrust authorities.     

Agri-environment scheme protects diversity of mountain grassland species

Most evaluations of agri-environment policies conducted in Europe have focused on biodiversity improvement effects. Their effectiveness with respect to protecting existing biodiversity has been less investigated. Biodiversity and landscape protection effects can be expected in marginal agricultural areas, where farming has been less intensive.We investigated (i) the effectiveness of the Ecological Compensation Area (ECA) scheme for biodiversity protection according to different evaluation criteria and (ii) how the effectiveness of the scheme was influenced by climate, socio-economic conditions and farming structures. Vegetation surveys were carried out in 18 municipalities across the Swiss Alps on 162 randomly selected meadows managed as ECAs and on 162 conventionally managed meadows. Average species richness of ECA-meadows per municipality ranged between 27 and 46 vascular plant species per 25m² (conventionally managed meadows: 16-35 species per 25 m²). In lower altitude municipalities (mainly fulltime farming) where ECA meadows constituted 20% of farmland, the difference in species richness between the two land-use types was highly significant and the contribution of ECA-meadows to the grassland species pool was highest. In higher altitude municipalities (mainly part-time farming) where ECA meadows constituted at least 40% of farmland, higher species richness was found. This was associated with a strong botanical similarity of ECA and conventionally managed meadows.We conclude that at lower altitudes, where farming is relatively intensive, the ECA scheme protects a few, economically marginal, species rich and botanically complementary sites, important for maintaining the species pool. At higher altitudes the ECA scheme contributes to protecting existing biodiversity at the landscape scale. As it is more efficient to protect than to restore biodiversity, the protection effect of agri-environmental schemes needs to be adequately recognized.     

Stürze gezielt vermeiden

Ein kleiner Stolperschritt, ein kurzer Schwindel – schon ist es passiert. Die Folgen sind oft schwerwiegend: Denn Hüftfrakturen oder Oberschenkelhalsbrüche k?nnen zum Ausl?ser von Pflegebedürftigkeit werden. Besonders gef?hrdet sind ?ltere Menschen.     

The financial transaction tax — Boon or bane?

Against the backdrop of the debate over the introduction of a financial transaction tax (FTT) in the European Union, this Forum is dedicated to the discussion of issues concerning the implementation and impact of such a tax on the financial sectors of the member states. Dorothea Sch?fer regards as the main policy goal of an FTT to be the prospect of slowing down the mutually reinforcing and growing trends of an increasing number of derivative products and shorter holding periods. The FTT can therefore make an important contribution to preventing the decoupling of financial markets from the real economy. The paper by Stephan Schulmeister discusses the essential features of a general FTT that will ensure that the more short-term oriented and riskier a transaction is, the greater the effect of the FTT on transaction costs. John Vella identifies some commonly made claims about an FTT which are of questionable foundation and compares the FTT with some alternative taxes on the financial sector. Donato Masciandaro and Francesco Passarelli focus on how an FTT measure aimed at reducing financial systemic risk can cause political distortions, leading to inefficient and ineffective policies. Finally, the paper by Ross Buckley analyses common myths, inaccuracies and untruths about the EU’s proposed FTT.     

Brand name influence on brand perception

The impact of hotel names on the evaluation of the hotels by customers prior to their stay was investigated. In general, hotels were rated higher on attributes consistent with the semantic associations of the name than on inconsistent attributes. This name effect was somewhat reduced—but still strong—when actual feature information was given, when consumers were explicitly told that the hotels bearing different names had exactly the same features, when consumers were provided with testimonials from former hotel guests, when consumers were informed that the name had changed in the past or would change in the future, and when the actual features were in with the image evoked by the name. The results corroborate the widely accepted assertion that consumers use brand names as diagnostic and legitimate search attributes. Most notably, the findings imply that the effects are robust and resistant to elimination. Four hundred clients of a travel agency participated in this research. © 2007 Wiley Periodicals, Inc.     

Triggers of HR outsourcing decisions – an empirical analysis of German firms

This paper takes an explanatory approach to the triggers of Human Resource (HR) outsourcing decisions and evaluates them empirically. Our data show that many German firms have never explicitly considered outsourcing of HR functions. Obviously, explicit outsourcing decisions do not come into being automatically but have to be triggered. We analyze theoretically and empirically which triggers are relevant. In our definition, HR outsourcing includes a broad range of internal HR functions and the respective, externally procured personnel services (e.g., temporary agency work, payroll accounting, interim management, outplacement services, HR consulting, placement services and others).