Sequential location equilibria under incomplete information

Summary We consider a simple model of incomplete information in location theory. Two firms compete in a two stage framework: a sequential location stage and a price competition stage. Firm 1 knows both its own constant marginal cost technology and that of Firm 2, whereas the latter has incomplete information about firm 1's technology. The location stage turns out to be a monotonic signaling game and theunique D1 equilibrium is a pure strategy separating equilibrium if firm 1's cost advantage is below some bound, and otherwise a pooling equilibrium if the prior probability that Firm 1 is of the low cost type is high, or a semi-pooling equilibrium if it is low. This surprising result is due to the fact that the location gap between the two types of Firm 1 is bounded because of natural economic reasons, which may prevent the separation of the two types. Hence, incomplete information matters: the equilibrium locations differ quite significantly from the full information equilibrium locations.We would like to thank an anonymous referee for very helpful comments and also the participants in seminars at GREQE (Marseille), Université de Montréal, UBC, HEC (Paris), in the Location Theory session of the World Congress of the Econometric Society (Barcelona) and in the Game Theory Conference at the University of Western Ontario for their comments. We remain, of course, solely responsible for the content of the paper. Financial support from FCAR (Québec), SSHRCC (Canada) and CNRS (France) is gratefully acknowledged.     

Some brief notes on the “unfinished business” of qualitative inquiry

The paper argues that there are a variety of implicit issues in qualitative inquiry that need to be addressed if the area is to develop in some normal science sense. This unfinished business is concerned with a deeper investigation of basic terms that are now simply taken for granted, such as theme and pattern. It also includes the need to develop rules which will assist in making and justifying how qualitative interpretations are made from the implicit processes of inference. Specific suggestions are made for accomplishing these issues.     

Child labor,urban proximity,and household composition

Using detailed survey data from Nepal, this paper examines the determinants of child labor with a special emphasis on urban proximity. We find that children residing in or near urban centers attend school more and work less in total but are more likely to be involved in wage work or in a small business. The larger the urban center, the stronger the effect is. Urban proximity is found to reduce the workload of children and improve school attendance up to 3 h of travel time from the city. In areas of commercialized agriculture located 3 to 7 h from the city, children do more farm work. Urban proximity effects are accounted for by a combination of local labor supply and demand conditions, most notably the local importance of agriculture, the education level of the parents, and the local wage rate. Child servants, which represent a small proportion of all children, work much harder than other children and appear particularly at risk.     

Concave utility on finite sets

When does a preference relation on a finite set have a concave or a strictly concave utility function? We provide a complete answer. Our proof is an application of the Theorem of the Alternative, and constructs a concave utility if one exists.     

A risk-neutral equilibrium leading to uncertain volatility pricing

We study the formation of derivative prices in an equilibrium between risk-neutral agents with heterogeneous beliefs about the dynamics of the underlying. Under the condition that short-selling is limited, we prove the existence of a unique equilibrium price and show that it incorporates the speculative value of possibly reselling the derivative. This value typically leads to a bubble; that is, the price exceeds the autonomous valuation of any given agent. Mathematically, the equilibrium price operator is of the same nonlinear form that is obtained in single-agent settings with worst-case aversion against model uncertainty. Thus, our equilibrium leads to a novel interpretation of this price.     

Stochastic Generational Accounting Applied to Reforms of Dutch Occupational Pensions

This paper examines stochastic or ‘value based’ generational accounting as a method to assess the intergenerational redistributive impact of pension reform. The analysis is applied to three policy changes to the regulation of Dutch occupational pensions during the years 2012 and 2013 that mark the transition from defined benefit pensions to ‘defined ambition’ pension schemes.     

Collaborative Prototyping: Cross‐Fertilization of Knowledge in Prototype‐Driven Problem Solving

This paper presents an inductive study that shows how collaborative prototyping across functional, hierarchical, and organizational boundaries can improve the overall prototyping process. Our combined action research and case study approach provides new insights into how collaborative prototyping can provide a platform for prototype‐driven problem solving in early new product development (NPD). Our findings have important implications for how to facilitate multistakeholder collaboration in prototyping and problem solving, and more generally for how to organize collaborative and open innovation processes. Our analysis reveals two levels of prototyping. Besides the more formal managerial level, we identify the informal designer level, where the actual practice of prototyping takes place. On this level, collaborative prototyping transforms the act of prototyping from an activity belonging exclusively to the domain of design engineers to an activity integral to NPD, with participants from within the organization (different functions and managers) and from outside (consultants and users). In effect, this collapses the discrete steps in the prototyping process (at the managerial level) to an essentially continuous process of iterative problem solving (at the designer level) that is centered around the collaborative prototype, which allows participants to see their suggestions implemented and exposing them to the design constraints. The study, moreover, shows how, at various stages of the prototyping process, the actual prototype was used as a tool for communication or development, thus serving as a platform for the cross‐fertilization of knowledge. In this way, collaborative prototyping leads to a better balance between functionality and usability; it translates usability problems into design changes, and it detects emerging usability problems through active engagement and experimentation. As such, the collaborative prototype acts as a boundary object to represent, understand, and transform knowledge across functional, hierarchical, and organizational boundaries. Our study also identifies some constraints in involving the appropriate stakeholders at the right time. The paper specifically elaborates on the role of users in collaborative prototyping, which is important in order to cover all phases of the problem‐solving cycle but triggers an interesting challenge due to the “reverse empathy” that a user may develop for the design constraints—parallel to the designer empathy for the user context. Finally, our study shows that despite the continuous nature of the (designer) practice of prototyping, there are certain windows of opportunities (at the managerial level) during which the collaborative prototyping approach actually leads to changes in the product design.     

Leveraging External Sources of Innovation: A Review of Research on Open Innovation

This paper reviews research on open innovation that considers how and why firms commercialize external sources of innovations. It examines both the “outside‐in” and “coupled” modes of open innovation. From an analysis of prior research on how firms leverage external sources of innovation, it suggests a four‐phase model in which a linear process—(1) obtaining, (2) integrating, and (3) commercializing external innovations—is combined with (4) interaction between the firm and its collaborators. This model is used to classify papers taken from the top 25 innovation journals, complemented by highly cited work beyond those journals. A review of 291 open innovation‐related publications from these sources shows that the majority of these articles indeed address elements of this inbound open innovation process model. Specifically, it finds that researchers have front‐loaded their examination of the leveraging process, with an emphasis on obtaining innovations from external sources. However, there is a relative dearth of research related to integrating and commercializing these innovations. Research on obtaining innovations includes searching, enabling, filtering, and acquiring—each category with its own specific set of mechanisms and conditions. Integrating innovations has been mostly studied from an absorptive capacity perspective, with less attention given to the impact of competencies and culture (including “not invented here”). Commercializing innovations puts the most emphasis on how external innovations create value rather than how firms capture value from those innovations. Finally, the interaction phase considers both feedback for the linear process and reciprocal innovation processes such as cocreation, network collaboration, and community innovation. This review and synthesis suggests several gaps in prior research. One is a tendency to ignore the importance of business models, despite their central role in distinguishing open innovation from earlier research on interorganizational collaboration in innovation. Another gap is a tendency in open innovation to use “innovation” in a way inconsistent with earlier definitions in innovation management. The paper concludes with recommendations for future research that include examining the end‐to‐end innovation commercialization process, and studying the moderators and limits of leveraging external sources of innovation.     

Marginal Economy: Growth Strategies for Post-Growth Societies

A sharp problem focus sharpens the problem. Sustainably growing bodies of literature on degrowth are not the key to post-growth scenarios because evocations of the limits of growth reinforce rather than transcend the economic principle, which is in the observation of scarcity. Therefore, I focus on alternative forms of growth rather than alternatives to growth. My form-theoretical analysis of growth dismoralizes growth and disembeds it from the economic medium in which it is preferably drawn. I suggest that the key to a post-growth society is in a regrowth of interest in growth in, so far, neglected non-economic function systems.     

Organizational Design,Competition, and Financial Exchanges

We investigate the incentives for vertical and horizontal integration in the financial securities service industry. In a model with two exchanges and two central securities depositories (CSDs), we find that decentralized decisions might lead to privately and socially inferior industry equilibria with vertical integration of both CSDs with their respective exchanges. Allowing for horizontal integration of CSDs avoids privately inferior industry equilibria. However, we observe too little horizontal integration from the social perspective. We link our results to recent regulatory and institutional developments such as the emergence of multilateral trading facilities, over-the-counter regulation, and financial harmonization.