Refining the bootstrap method of stochastic dominance analysis: The case of the January effect

This study investigates the effect of sample size and population distribution on the bootstrap estimated sampling distributions for stochastic dominance (SD) test statistics. Bootstrap critical values for Whitmore's (1978) second- and third-degree stochastic dominance test statistics are found to vary with both data sample size and variance of the population distribution. The results indicate the parametric nature of the statistics and suggest that the bootstrap method should be used to estimate a sampling distribution each time a new data sample is drawn. As an application of the bootstrap method, the January small firm effect is examined. The results conflict with the SD results of others, and indicate that not all investors would prefer to hold just a portfolio of small capitalization firms in January.     

First-mover advantages from pioneering new markets: A survey of empirical evidence

Market pioneers can develop first-mover advantages that span decades. The most general first-mover advantage that helps explain higher pioneer market share levels is a broad product line or brand proliferation. In markets for experience goods, pioneers tend to shape consumer tastes and preferences in favor of the pioneering brand. While the preliminary results vary by industry, they indicate that market pioneers donot tend to perish more often than later entrants. Accounting profits for market pioneers generally are lower in the first four years of operation, but higher thereafter. Overall, market pioneers follow innovative strategies that have high initial costs and risks, but yield high potential returns.     

Entry timing,exploration, and firm survival in the early U.S. bicycle industry

We explore the relationship between a firm's entry timing and its probability of surviving the early, uncertain period of its industry, and consider the trade‐off between entering early and potentially establishing a strong position in the industry vs. waiting until technological uncertainty is reduced. We hypothesize that, owing to inertial forces, firms that enter the industry at the earliest point in its history are least likely to make the conversion to the product generation that becomes the dominant design in the industry. Exploration through the introduction of new products appears to reflect a local search process and retards the transition to the dominant design. We also hypothesize that, though firms entering early may exhibit longer life spans, their advantages are limited to the period before the emergence of the dominant design. We test our hypotheses in the early U.S. bicycle industry, and find evidence consistent with the idea that inertia limits firms' abilities to make the transition between generations of product configurations. Copyright © 2006 John Wiley & Sons, Ltd.     

A technique for estimating the average duration of commuter trips

The opportunity cost of the journey to work is usually calculated by multiplying an hourly value-of-time figure by the duration of an average trip. There is a shortage of reliable up-to-date data concerning the average duration of commuter trips. This note presents a technique for estimating average durations using urban density functions and a traffic speed model. The method is tested for London.     

Hayek Contra Pangloss: A Rejoinder

Whitman (1998) claims that Friedrich Hayek's theory of cultural evolution was not Panglossian. Denis's (2002) refutation relies on an overbroad definition of the term Panglossian, a misunderstanding of the implications of group selection theory, and an incomplete understanding of the nested character of evolutionary processes in Hayek's approach.     

Reforming or Transforming the Federal Tax System: (A Review Essay)

A bstract . Several proposals to reform the federal income tax system are under active consideration. Professor Richard W. Lindholm has proposed instead that we abolish the individual and corporate income taxes and the estate and gift taxes. To replace the lost revenue he proposes a flat 15 per cent value added tax and a flat 2 per cent net wealth tax. He posits five goals for successful tax reform and discusses his proposed system in terms of them. He finds his system would be simpler and less disruptive of markets than even a simplified income tax structure.     

Book Reviews

Yoshihara Kunio, The Rise of Ersatz Capitalism in Southeast Asia, Singapore: Oxford University Press, 1988.

Pang Eng Fong (Ed.), Labour Market Developments and Structural Change: The Experience of Asean and Australia, Singapore: Singapore University Press, 1988, pp. 296 + xvii, index.

Michael T. Skully and George J. Viksnins, Financing East Asia's Success: Comparative Financial Development in Eight Asian Countries, Hong Kong: Macmillan, 1987, pp. 242 + xiii. cloth: $82.95.

Felix Schmidt Der Beitrag des Staedtischen Informellen Sektors zur Sozialoekonomischen Entwicklung Indonesiens. Dargestellt am Beispiel der Stadt Bandung [The Contribution of the Urban Informal Sector to Socio-economic Development in Indonesia: The Case of the City of Bandung], Schriften zu Regional - und Verkehrsproblemen in Industrie Bandung], Schriften zu Regional - und Entwicklungslaendem, Bd 45, Berlin: Duncker and Humbolt, 1988, pp. 295 + xix. DM 68,-.

Jennifer Alexander, Trade, Traders and Trading in Rural Java, Singapore: Oxford University Press/ASAA Southeast Asia Publications Series, 1987.

Colin MacAndrews, Land Policy in Modern Indonesia, Boston: Oelgeschlager, Gunn and Hain/The Lincoln Institute of Land Policy, 1986, pp. 119 + viii.

Wolf Donner, Land Use and Environment in Indonesia, London: C. Hurst and Company, 1987, pp. 368 + xix.

Robert Repetto, The Forest for the Trees? Government Policies and the Misuse of Forest Resources, Washington: World Resources Institute, pp. 105 + viii. Cloth: $US 10.00.

Sjahrir, Kebijaksanaan Negara - Konsistensi dan Implementasi [Public Policy - Consistency and Implementation], Jakarta: LP3ES, 1987, pp. 230 + viii.

Mubyarto, Ekonomi Pancasila: Gagasan dan Kemungkinan [The Pancasila Economy: Concept and Possibilities], Jakarta: LP3ES, 1987, pp. 238 + ix.

M. Dawam Rahardjo, Perekonomian Indonesia: Pertumbuhan dan Krisis [The Indonesian Economy: Growth and Crisis], Jakarta: LP3ES, pp. 299 + xviii.

Anthony Reid, Southeast Asia in the Age of Commerce, 1460–1680. Volume One: The Lands Below The Winds, New Haven and London: Yale University Press, 1988, pp. 275 + xvii.

E.E. van Delden, Klein Repertorium: Index op Tijdschriften met Betrekking tot Voormalig Nederlands-lndie. Deel 1: Tijdschrift voor het Binnenlandsch Bestuur 1887–1900, Amsterdam: Koninlijk Instituut voor de Tropen, 1986, pp. 79.     

The Role of Private Equity in Life Sciences

In a roundtable published in this journal a year ago, there was a clear consensus that the R&D function in big pharma was inefficient and in need of major restructuring, possibly through increased investments by venture capital and private equity firms. In this discussion, an accomplished group of industry practitioners begins by looking at the prospects for both venture capital and private equity to play meaningful roles in financing early- and mid-stage drug development. In so doing, they explore questions like the following:

• • Are there ways for big pharma and biotech to reduce “science risk” and make R&D funding more profitable and attractive to venture capital and private equity—and perhaps even hedge funds?
• • What roles do you see for specialty PE firms like Symphony Capital and Paul Capital, which are now bundling mid-stage development assets and securitizing royalties?

Then the panelists turn to the broader life sciences industry and consider the outlook for leveraged private equity transactions involving marketed products, late-stage development, and services. Here they consider issues like the following:

• • Will PE be attracted to less-R&D-intensive activities like medtech and generics?
• • Have the recent consolidation through mergers and reorganization of big pharma into decentralized business units created opportunities for carve-outs of certain businesses?

For big pharma and life sciences companies in general, the answers to such questions point to greater specialization and focus achieved partly through strategic alliances with venture capital, private equity, and even hedge funds, and involving marketed products and services as well as early-stage drug development.     

Evolution of the Corporation in the United States: Stabilized Scarcity and Vested Interests

The widening of markets beginning in the late nineteenth century in the United States involved changes in the financial and legal institutions supporting production for large-scale markets. The evolution of the corporation under these circumstances reflects the role of the legal system in formulation of formal rules which favor vested interests. As Thorstein Veblen said, “A constitutional government is a business government.”

This article examines the co-evolution of the legal system and the economic system as they relate to the merger movement at the turn of the twentieth century, the increased use of the corporate form, and the emphasis on pecuniary values over production to secure stabilized scarcity in the midst of cutthroat competition and deflation. The resultant financialization of the economy which continues today was reinforced by such legal rules as the Fourteenth Amendment’s protection of property, including intangible property, and the Rule of Reason accommodating some instances of monopolization. These stabilization policies have secured the rentiers’ return at the cost of the long term health of the national economy. John R. Commons’ observations on artificial selection and the use of law to make capitalism better offer a solution through laws regulating the detrimental aspects of financialization.     

Overlapping Marathons: What Happens to Female Pace When Men Catch Up?

We exploit a highly competitive environment in which elite‐female athletes are exposed to the presence of men, but without being in direct competition with them. Specifically, we use variation in how fast the fastest man runs in the New York City Marathon to identify the potential influence of men on female performance while holding constant female‐runners' marginal incentives to perform. Our results suggest that as the men overtake the female runners, the performance of female runners declines differentially across ability, with the largest declines concentrated among lower ability runners.