Stackelberg price leadership in the linear heterogeneous duopoly

We consider for the linear heterogeneous duopoly with substitutive goods and with price strategies the situations in which one firm, firm 1 say, prefers to be price leader, whereas firm 2 prefers to be price follower. Conditions that necessarily hold in that case are derived and interpreted in economic terms. These conditions characterize the powerful position of firm 1 relative to firm 2 on the market.The author thanks Prof. Gerard F. Pikkemaat, Prof. Georg Tillmann, and two anonymous referees for their very useful remarks with respect to an earlier version of this paper.     

Public Social Spending in Africa: Do the Poor Benefit?

Education and health care are basic services essential in anyeffort to combat poverty and are often subsidized with publicfunds to help achieve that purpose. This paper examines theeffectiveness of public social spending on education and healthcare in several African countries and finds that these programsfavor not the poor, but those who are better-off. It concludesthat this targeting problem cannot be solved simply by adjustingthe subsidy program. The constraints that prevent the poor fromtaking advantage of these services must also be addressed ifthe public subsidies are to be effective.      

The emotional side of price

This exploratory study considers the role emotion plays in relationships among several constructs surrounding price. The findings suggest that some aspects of emotion—here surprise and enjoyment—play a role in consumers' responses to and use of price information. Surprise and enjoyment were found to act in concert with involvement, price consciousness, and price–quality associations in respondents' complex reactions to price. Everyone's personal experience suggests that emotions can influence people's reactions to the price of products; this research lends preliminary empirical support to such everyday experiences. The results of this exploratory study clearly point to the need for more definitive studies in the future. © 2001 John Wiley & Sons, Inc.     

When Is the Averaging Effect Present in Auditor Judgments?

Auditing standards task auditors with collecting sufficient appropriate evidence to form audit judgments. Yet, cognitive psychology documents a robust finding in which people evaluate a bundle of relevant, directionally consistent evidence as though averaging the strength of the components. In consequence, a bundle of evidence may be viewed as weaker evidence than the bundle's strongest evidence item alone. We experimentally examine whether this averaging effect occurs in an audit context, and we test a potential moderator. In three independent mini-cases, we ask auditor participants to make judgments about going concern, internal controls, and fraud risk. We present auditors with unfavorable audit evidence relevant to each judgment, manipulating whether we present a single strong evidence item or bundle it with a weaker evidence item. We also manipulate the auditor's initial impression of the client's state. We find that experienced auditors succumb to the averaging effect, making more strongly unfavorable judgments in response to the single evidence item than the bundle, and that this bias is reduced when the observed evidence is inconsistent with the auditor's initial impression. We interpret our results as consistent with the dual-processing theory of cognition.     

We Must Find the Courage to Change

The Thought‐Leader Series of five articles in the March 2014 issue of the Journal of Business Logistics made it clear that major changes are required in both Logistics and Supply Chain Management programs and indeed in business schools. The articles provided further evidence of how ill‐advised metrics in the hands of fools not only result in a misuse of financial resources but also squander “the efforts of some of the world's best minds” (Economist 2013a). We address the problems that these “Thought‐Leader” pieces reveal, briefly review the criticism of business schools, and describe how the metrics used to evaluate performance are driving the wrong behavior. We offer recommendations for change including: stop competing based on flawed ranking systems; focus on providing students with a quality cross‐functional education; encourage faculty members to conduct problem‐driven, big‐idea research that impacts management practice; and change the incentive system for faculty and administrators. Faculty members in Logistics and Supply Chain Management have a unique opportunity to make substantial contributions due to the boundary‐spanning nature of these fields and the traditional emphasis on applied research. We should not ignore these strengths. Implementing our recommendations will not be easy but we must find the courage to change.     

THE POTENTIAL FOR SHORT‐RUN SHIFTING OF A CORPORATE PROFITS TAX

Can the owners of a firm shift a corporate profits tax to consumers? Not in the short run if the tax is stated as a proportion of profits and the firm is a profit maximizer. But what if the firm wishes to pursue a strategy other than profit maximization, say revenue maximization subject to a profit constraint? Under such a condition the firm's reaction to a tax or tax increase might be a price rise that captures part of the foregone profits. We show that firms which operate at a point on their demand curve that differs from profit maximization have an incentive to raise price in response to the tax – and that high cost firms have a greater incentive to raise price than do low cost firms. Our empirical analysis of the US beer industry confirms this finding, and sheds light on the Krzyzaniak–Musgrave analysis of the 1960s which suggested that the corporation income tax produced significant short‐run shifting.