Confronting the implications of the Cournot model with industry and firm data

This paper derives testable implications of the standard Cournot models and confronts these implications with real world data. Though we cannot expect that real world may be characterized by a simple static homogeneous model, it is surprising that little empirical work exists on testing the implications of this most popular model of oligopoly and non cooperative game theory.We make use of three data sets for manufacturing industry, two of them on the firm level, one about firms grouped according to their size. The relation of the results to the predictions of the Cournot model is discussed, as well as its relation to alternative oligopoly models. We specifically focus at the question whether the implications of the oligopoly models on the performance of large versus small firms are in line with the data.     

Revisiting an Evasive Concept: Introduction to the Special Issue on Competitiveness

The term competitiveness stems from the analysis of firms and is usually thought to be well defined at the firm level. Today, however, the notion competitiveness has become a prominent concept in the assessment of countries, regions and locations. The competitive advantage of nations and the competitiveness of locations have become important topics in economic policy. Interest in this field has been notably stimulated by the work of Michael Porter. Although the diversity of approaches presented in this issue may appear large to the reader, it is in reality dwarfed by the multiplicity of concepts, articles and books which have been written in reference to the term competitiveness. The vagueness of the general term, the lack of theoretical background, implicit preferences and prejudices, and finally the scope of policy recommendations made in reference to this term have induced outstanding researchers to warn that the term competitiveness of a nation could be dangerous, obsessive, elusive or meaningless.¹ The articles presented in this volume share some elements of this critique, but also demonstrate that research is being continued, and that it is indeed relevant to the design and evaluation of economic policy, most notably, the so-called Lisbon Strategy of the European Union.     

Der EU-Haushaltskompromiss vor dem Hintergrund der Gemeinsamen Agrarpolitik

Dem Kompromiss über die EU-Haushaltsplanung für die Jahre 2007 bis 2013 war eine kontroverse Debatte über den Umfang des „Briten-Rabatts“ und die Gemeinsame Agrarpolitik vorausgegangen. Welche Bedeutung hat die Agrarpolitik für die EU? Welche Mitgliedstaaten geh?ren im EU-Haushalt zu den Nettozahlern? Besteht ein Zusammenhang zwischen den Zahlungsstr?men aus dem EU-Haushalt und der Wohlstandsverteilung innerhalb der EU?     

Financial Integration and EMU’s External Imbalances in a Two-Country OLG Model

The pronounced increase in external imbalances in the European Economic and Monetary Union (EMU) during the years running up to 2008 is traditionally explained by financial integration through the common currency. This paper examines in a one-good, two-country overlapping generations’ model, with production, capital accumulation and public debt, the effects of financial integration on the net foreign asset positions of initially low-interest and high-interest rate EMU countries. We find that a lower savings rate and government expenditure quota, together with a higher capital production share in the latter can in fact be transformed into the observed external imbalances when interest rates converge.     

Regional influences on the prevalence of family versus non-family start-ups

We integrate insights from family business and organizational ecology into the entrepreneurship field by constructing a theoretical framework that explains how the regional context impacts family and non-family start-ups in differing ways. Regional count data models based on a rich longitudinal dataset reveal that while economic factors such as population size and growth in regions are primarily associated with the number of non-family start-ups, factors related to regional embeddedness, such as pre-existing small family businesses as well as favorable community attitudes toward small businesses, are more strongly associated with the number of family start-ups. Our research provides support for the notion that ‘the regional context’ is an important yet under-theorized area for research on venture creation and family business.     

Practice makes perfect: Entrepreneurial-experience curves and venture performance

This study tackles the puzzle of why increasing entrepreneurial experience does not always lead to improved financial performance of new ventures. We propose an alternate framework demonstrating how experience translates into expertise by arguing that the positive experience–performance relationship only appears to expert entrepreneurs, while novice entrepreneurs may actually perform increasingly worse because of their inability to generalize their experiential knowledge accurately into new ventures. These negative performance implications can be alleviated if the level of contextual similarity between prior and current ventures is high. Using matched employee–employer data of an entire population of Swedish founder-managers between 1990 and 2007, we find a non-linear relationship between entrepreneurial experience and financial performance consistent with our framework. Moreover, the level of industry, geographic, and temporal similarities between prior and current ventures positively moderates this relationship. Our work provides both theoretical and practical implications for entrepreneurial experience—people can learn entrepreneurship and pursue it with greater success as long as they have multiple opportunities to gain experience, overcome barriers to learning, and build an entrepreneurial-experience curve.     

Cross-ownership as a structural explanation for over- and underestimation of default probability

Based on the work of Suzuki, we consider a generalization of Merton’s asset valuation approach in which two firms are linked by cross-ownership of equity and liabilities. Suzuki’s results then provide no arbitrage prices of firm values, which are derivatives of exogenous asset values. In contrast to the Merton model, the assumption of lognormally distributed assets does not result in lognormally distributed firm values, which also affects the corresponding probabilities of default. In a simulation study we see that, depending on the type of cross-ownership, the lognormal model can lead to both over- and underestimation of the actual probability of default of a firm under cross-ownership. In the limit, i.e. if the levels of cross-ownership tend to their maximum possible value, these findings can be shown theoretically as well. Furthermore, we consider the default probability of a firm in general, i.e. without a distributional assumption, and show that the lognormal model is often able to yield only a limited range of probabilities of default, while the actual probabilities may take any value between 0 and 1.     

Versicherungstechnische Gesichtspunkte auf die finanziellen Fragen der Lebensversicherung

Kapitel I. Bibliographisches

Die versicherungstechnische Litteratur hat sich verhältnismässig wenig mit den aktuariell-finanziellen Fragen befasst. Bemerkenswert ist es deshalb, dass die meisten von den bis jetzt abgehaltenen neun internationalen Aktuarkongressen die eine oder die andere Frage aus oben erwähntem Gebiet in ihrem Programm aufgenommen haben. So z. B. beschäftigte sich der erste Kongress, der 1895 in Brüssel tagte, mit dem Gegenstand: “Des mesures qui pourraient être prises par les institutions qui contractent des engagements à long terme, pour se premunir contre les conséquences des variations du taux d intérêt.” Der Kongress im Jahre 1900 in Paris hatte in seinem Programm das Thema: “Méthodes à employer pour evaluer les titres mobiliers compris dans l'actif d'une Société quelconque.” Bei dem New Yorker Kongress 1903 wurde die Prage über “The Probable Future Course of the Rate of Interest” erörtert. Dem Wiener Kongress 1909 war die Frage über “Kapitalsanlagen der Versicherungsgesellschaften mit besonderer Berücksichtigung der modernen Entwickelung” zur Behandlung vorgelegt. Das Programm des Londoner Kongresses 1927 enthielt das Thema “Currency Depreciation as affecting Life Assurance Contracts”.     

The Impact of Aging Population on the Rise of the Health Care Cost in the Czech Republic

Population aging is believed to be a major factor behind the rise of health care cost worldwide. However, an increasing body of evidence in the literature on the subject of population aging and its influence on health care cost suggests that demographic changes play a relatively minor role in driving up the health care bill. Firstly, we review some available evidence. Secondly, we analyze the situation in the Czech Republic using financial and health care utilization data and demographic projections. Thirdly, we point out the main areas of health care responsible for the health care expenditures growth in the Czech Republic.