Asymptotic behavior of market shares for a stochastic growth model

Consider a market with finitely many firms, each enjoying an uncertain growth. We assume the (random) growth rates of these firms are independent and identically distributed. We show that the asymptotic probability distribution of the market shares gives each firm an equal probability of dominating the market (while all other firms are almost extinguished). In particular, these conclusions are independent of the initial market shares of the firms. We conclude that sample paths fluctuate between almost domination and almost extinction. We also demonstrate that these fluctuations may be very slow. Extensions to situations where the total demand is restricted are discussed.     

Agency Costs in Apartment Property Management Contracts

Because fees for property management services are based on gross rental collections rather than on net operating incomes, property managers may not always act in the best interest of property owners. This study is an examination of the agency costs that result from the conflict of interests between owners and managers. A nationwide proprietary sample of 242 apartment properties is analyzed to compare agency costs of four distinct types of ownership structures. Agency costs, measured as operating expenses per square foot, are found to be significantly higher for institutional owners than for noninstitutional owners, but not significantly higher in cases where no competition for property management services exists. We conclude that agency costs of property management contracts are significant and the fee provisions of standard property management contracts should be changed to better align the interests of managers and owners.     

The co‐evolution of capabilities and transaction costs: explaining the institutional structure of production

This paper proposes that transaction costs and capabilities are fundamentally intertwined in the determination of vertical scope, and identifies the key mechanisms of their co‐evolution. Specifically, we argue that capability differences are a necessary condition for vertical specialization; and that transaction cost reductions only lead to specialization when capabilities along the value chain are heterogeneous. Furthermore, we argue that there are four evolutionary mechanisms that shape vertical scope over time. First, the selection process, itself driven by capability differences, dynamically shapes vertical scope; second, transaction costs are endogenously changed by firms that try to reshape the transactional environment to increase their profit and market share; third, changes in vertical scope affect the nature of the capability development process, i.e., the way in which firms improve their operations over time; and finally, the changes in the capability development process reshape the capability pool in the industry, changing the roster of qualified participants. These dynamics of capability and transaction cost co‐evolution are illustrated through two contrasting examples: the mortgage banking industry in the United States, which shows the shift from integrated to disintegrated production; and the Swiss watch‐manufacturing industry, which went from disintegration to integration. Copyright © 2005 John Wiley & Sons, Ltd.     

Concentration,unionization and the distribution of income in Canadian manufacturing industry

An attempt is made to assess how the unionization of labor and the presence of buyers possessing monopsony power affects the distribution of income among the factors of production in Canadian manufacturing. It is found that these variables have a composite effect. They transfer income from factors of production in one industry to the factors in another. They also affect the distribution of income between labor and capital within industries.     

Notes on a possible Bentham manuscript: a mystery unresolved

In the Works and Correspondence of David Ricardo (Volume x)Piero Sraffa noted that the Mill-Ricardo case of the RicardoPapers deposited at Cambridge contained ‘a paper probablyin Bentham's hand-wriring on the effects on profits of cultivatingsuccessive qualities of land'. In 1978 I made a search of theRicardo Papers and no such document was to be found. This notereports the discovery in Trinnity College Library—andprovides a trancription—of a document that may be theelusive item, though it is in James Mill's hand.