Industry concentration in South African manufacturing industry: Trends and consequences, 1972–96

This paper reports industry concentration measures for the South African manufacturing sector over the 1972–1996 period for the three digit industry classification. Noted are high level of industry concentration in South African manufacturing, and a rising trend in concentration across a wide range of industries as measured by the Gini coefficient, though some countervailing evidence emerges on the Rosenbluth index. Analytically the paper examines the impact of concentration on employment and investment rates. Results show that increased concentration unambiguously lowers employment. For investment rates, increased inequality of market share serves to raise investment rates, while falling firm numbers for any given inequality of market share lowers investment rates. The difference is consistent with a disciplining effect of a competitive fringe of firms on the behaviour of large firms in a market.     

MCMC maximum likelihood for latent state models

This paper develops a pure simulation-based approach for computing maximum likelihood estimates in latent state variable models using Markov Chain Monte Carlo methods (MCMC). Our MCMC algorithm simultaneously evaluates and optimizes the likelihood function without resorting to gradient methods. The approach relies on data augmentation, with insights similar to simulated annealing and evolutionary Monte Carlo algorithms. We prove a limit theorem in the degree of data augmentation and use this to provide standard errors and convergence diagnostics. The resulting estimator inherits the sampling asymptotic properties of maximum likelihood. We demonstrate the approach on two latent state models central to financial econometrics: a stochastic volatility and a multivariate jump-diffusion models. We find that convergence to the MLE is fast, requiring only a small degree of augmentation.     

Capstone or deadweight? Inefficiency, duplication and inequity in South Africa's tertiary education system, 1910-93

This paper presents time series on South African tertiary education.The data series presented cover inputs and outputs for the university,technical training and teacher training systems. Modern growththeory has emphasised the importance of human capital, thoughempirical studies have attempted to isolate human capital impactsthrough single aggregate measures that capture only a quantityof human capital dimension. While data analysis in the presentstudy is exploratory in nature, we show that strong qualitydifferentials exist both within and between different partsof the tertiary education system. The methodological implicationfor growth studies is that fully accounting for both the quantityand quality of human capital in aggregate human capital measuresthus faces significant measurement difficulties. The data alsoestablish that discrimination in the South African tertiaryeducation was not simply a question of underresourcing of Blackinstitutions. Quality of output was low, but attaining it wasfrequently very expensive.     

Contests with investment

Perfectly discriminating contests (all pay auctions) are widely used as a model of situations where individuals devote resources to win some prize. In reality such contests are often preceded by investments of the contestants into their ability to fight in the contest. This paper studies a two stage game where in the first stage, players can invest to lower their bid cost in a perfectly discriminating contest, which is played in the second stage. Different assumptions on the timing of investment are studied. With simultaneous investments, equilibria in which players play a pure strategy in the investment stage are asymmetric, exhibit incomplete rent dissipation, and expected effort is reduced relative to the game without investment. There also are symmetric mixed strategy equilibria with complete rent dissipation. With sequential investment, the first mover always invests enough to deter the second mover from investing, and enjoys a first mover advantage. I also look at unobservable investments and endogenous timing of investments. Copyright © 2007 John Wiley & Sons, Ltd.     

Continuity and Change in Mergers and Acquisitions: A Social Identity Case Study of a German Industrial Merger*

abstract It is crucial from an employee's point of view to perceive some degree of stability even in times of major organizational change. This paper examines the role of a sense of continuity for organizational identification after an organizational merger. We argue that mergers and acquisitions so often end in failures partly because the change is designed in discontinuous ways and employees do not feel they are doing the same job after the merger as before. Such discontinuous change engenders a critical tension between positive and negative effects of identification that has not yet been fully understood. To deepen the understanding of this tension, in‐depth interviews were conducted in a recently merged German industrial company. Based on these qualitative data we demonstrate how features of the post‐merger company structure and the way it was implemented may have eroded organizational identification. Finally, we propose a parsimonious model to be tested by future research, in which the sense of continuity is consisting of both observable as well as projected continuity.     

The Impact of Jumps in Volatility and Returns

This paper examines continuous‐time stochastic volatility models incorporating jumps in returns and volatility. We develop a likelihood‐based estimation strategy and provide estimates of parameters, spot volatility, jump times, and jump sizes using S&P 500 and Nasdaq 100 index returns. Estimates of jump times, jump sizes, and volatility are particularly useful for identifying the effects of these factors during periods of market stress, such as those in 1987, 1997, and 1998. Using formal and informal diagnostics, we find strong evidence for jumps in volatility and jumps in returns. Finally, we study how these factors and estimation risk impact option pricing.     

Urban land rent theory: a regulationist perspective

Whilst real estate capital became a driving force in analyses of urban development, urban land rent theory has made only very limited progress during the past decade. There are a number of reasons for this – such as a weak conceptualization of the role of political agency, for example. Hence, a way out of this relative stagnation, by attempting to systematically develop an integrated view on structure and agency in the context of urban land rent, is offered in this article. Advances in critical theory, thinking about space and dialectic reasoning contribute to the development of a new perspective on land rent. Land rent is conceptualized as a middle‐range theory. In order to bring together concrete urban phenomena with the general process of political‐economic development, a systematic link between land rent theory and the theoretical apparatus of the French Regulation School is developed. The reformulation of land rent theory from a regulationist perspective underlines the importance of the institutional context (and its changes) for an understanding of rent and its role in the urban context. In so doing, land rent theory proves to be a very useful tool for providing an integrated political‐economic perspective for analyses of urban phenomena. This is illustrated briefly in the cases of Vienna and Montevideo. Si le capital immobilier est devenu un point central des analyses du développement urbain, la théorie n'a guère progressé au cours de la dernière décennie. Plusieurs facteurs sont en cause, telle la faible conceptualisation du rôle politique d'agence. Cet article propose donc une porte de sortie à cette relative stagnation, en tentant de construire systématiquement une vision intégrée de la structure et l'agence dans le cadre de la rente urbaine. Les progrès en matière de théorie critique, réflexion en termes d'espace et raisonnement dialectique facilitent l'élaboration d'une nouvelle perspective sur la location foncière, laquelle est conceptualisée en tant que théorie intermédiaire. Afin de regrouper phénomènes urbains concrets et processus général d'aménagement politico‐économique, une relation systématique est établie entre la théorie sur la rente foncière et l'appareil théorique de l'École Française de Régulation. Reformuler la théorie sur la rente foncière d'un point de vue régulationiste souligne combien le contexte institutionnel (et ses changements) est important pour comprendre la rente et son rôle dans le cadre urbain. Ce faisant, la théorie sur la rente foncière se révèle un outil très utile pour créer une perspective politico‐économique intégrée permettant d'analyser les phénomènes urbains. Cet aspect est brièvement illustré dans les cas de Vienne et Montevideo.     

Disaggregate productivity comparisons: sectoral convergence in OECD countries

International comparisons of productivity have used exchange rates or purchasing power parity (PPP) to make output comparable across countries. While aggregate PPP holds well in the long run, sectoral deviations are persistent. It raises the need for a currency conversion factor at the same level of aggregation as the output that is compared. Mapping prices from household expenditure surveys into the industrial classification of sectors and adjusting for taxes and international trade, I obtain an expenditure-based sector-specific PPP. Using detailed price data for up to 8 years between 1970 and 1999, I test whether the sectoral PPPs adequately capture differential changes in relative prices between countries. They work well for agriculture and the majority of industrial sectors, but not for most service sectors and for manufacturing sectors that produce differentiated products. Using the most appropriate conversion factor for each industry, productivity convergence is found to be taking place in all but a few industries for a group of 14 OECD countries. The latter results are robust to the base year used for the currency conversion.     

Recognition Based upon the Vitality Criterion: A Key to Sustainable Economic Success

Recognition is a basic precondition of participation. This article applies the dimension of recognition to business ethics. A case is made for normative stakeholder management as a voluntary commitment at the level of corporate leadership; this also meets management’s strategic demands. A vitality criterion is offered as a heuristic instrument, suggesting that any operation should be avoided which would violate the legitimate interests of stakeholders. For this reason, the recognition of mutually-conditioned stakeholder claims is understood as the central management idea.     

Eine goldene Regel für die Modellierung von Daten zur Erstellung von Data-Mining-Klassifikationsmodellen unter besonderer Berücksichtigung von Problemstellungen in der Versicherungswirtschaft

A golden rule for data modelling for data mining classification models with special considerations of problems in insurances. To create classification models to avoid contract cancellations and for cross selling purposes to be used in marketing and sales of insurance companies the necessary data modelling will be discussed. Starting from a binary classification variable — cancelled contracts and active contracts, customers of a branch and non-customers of a branch — we in particular focus on the importance of historical data: To be able to detect decision patterns for cancellations respectively for new contracts in the data with the help of data mining tools, it is necessary for such contracts respectively customers not to use actual data, but data as they were at the time of decision. This obvious, but rarely used principle, is presented in detail as a golden rule for correct data modelling in such situations. As a case study a project and results for nine branches in each case of the Gothaer Versicherungen is presented.