Bargaining over managerial contracts in delegation games: managerial power,contract disclosure and cartel behavior

Modern corporate governance codes include clauses requiring the disclosure of managerial compensation. Such codes have been installed to protect shareholders' interests. In this paper, we explore the impact of such disclosure on consumer welfare. We consider two‐stage delegation games in which owner‐shareholders negotiate about compensation with their managers in the game's first stage. At the end of the first stage, the managerial compensation contract outcomes of the bargaining process are publicly announced. In the second stage, Cournot competition evolves. We prove that sales delegation generates equilibria radically different from relative performance delegation. Using classical Cournot as the benchmark, contractual bargaining over sales compensation gives tougher product market competition—and hence higher consumer surplus. The opposite holds true for relative performance delegation. Then, cartel behavior is promoted, reducing consumer surplus. Copyright © 2007 John Wiley & Sons, Ltd.     

The Construction of Input–Output Coefficients Matrices in an Axiomatic Context: Some Further Considerations

Kop Jansen & ten Raa (1990) established a purely theoretical solution to the problem of selecting a model for the construction of coefficients on the basis of make and use tables. In an axiomatic context, they singled out the so-called commodity technology model as the best one according to some desirable properties. The aim of this paper is to delineate the restrictions on the relevant data sets that ensure fulfilment of the desirable properties by other models used by statistical offices.     

Making explicit in design education: generic elements in the design process

In general, designing is conceived as a complex, personal, creative and open-ended skill. Performing a well-developed skill is mainly an implicit activity. In teaching, however, it is essential to make explicit. Learning a complex skill like designing is a matter of doing and becoming aware how to do it. For teachers and students therefore, it will be helpful to make the design process explicit. In this paper, a conceptual framework is developed to be more explicit about the design process. Based on research of the design process, on differences between novices and expert designers, and on personal experience in design education practice, five generic elements in the design process are distinguished: (1) experimenting or exploring and deciding, (2) guiding theme or qualities, (3) domains, (4) frame of reference or library, (5) laboratory or (visual) language. These elements are generic in the sense that they are main aspects and always present in the complex, personal, creative and open-ended design process.     

The interest function approach

Summary This article reviews Frans van Winden's Ph.D. dissertation,On the Interaction between State and Private Sector: A Study in Political Economics, State University Leyden, 1981, viii+319 pages. The proclaimed objective of the book is to present a nonnormative, theoretical analysis of the interaction between state and private sector in a capitalist economy. Review of the analysis leads us to conclude that the objective is not met. I would like to thank Jean Paelinck and Rick van der Ploeg for their suggestions, and also Bernard van Praag for his apparent interest in the matter. I am particularly indebted to Professor F.A.A.M. van Winden who kindly provided extensive comments on the first draft of this review. Sloan Foundation and Netherlands Organization for the Advancement of Pure Research (Z.W.O.) grants through New York and Erasmus Universities, respectively, are gratefully acknowledged.     

Success Factors for Mass Customization: A Conceptual Model

Mass customization entails the ability to provide customized products and services to individual customers using technology (information) at optimal production efficiency and cost levels. The concept is gaining prominence because the marketing literature is increasingly focused on delivering superior customer value. Although the mass-customization literature provides many insights into its origins, formats and approaches, it does not provide a coherent framework to assess the viability of a successful mass-customization strategy. Based on the premise of customer perceived value, we have developed a conceptual framework to address this need. We present a series of hypotheses that serve to encourage other authors and direct future research.     

Welfare effects of energy subsidy reform in developing countries

We analyze the potential welfare effect of energy subsidy reforms. The income distributions of eleven developing countries from different geographical regions are simulated using the assumption that income is lognormally distributed. We use the concept of the compensating variation to measure how much compensation is required to compensate consumers for a price increase in formerly subsidized goods. The behavior of consumers is modeled by a standard Cobb–Douglas and a quasilinear utility function. In the Cobb–Douglas case, a fixed fraction of income is spent on the subsidized good, which does not change after a price increase. With quasilinear preferences, the optimal amount of the subsidized good does not vary with income, but does change as prices change. We show theoretically and empirically that the required compensating variation can be set below the saved expenditures on subsidies, so a budget neutral reform can have a positive effect on social welfare.     

不完全竞争下区际贸易政策选择

大国的国内区际贸易可以为该国产业和企业在国际市场提供竞争力支撑。我国作为一个大国,区际贸易因贸易壁垒的广泛存在而受阻,难以为我国产业和企业在国际市场提供竞争力支撑。本文分析了不完全竞争产业区际贸易壁垒存在的经济驱动力,其基本结论是:区际贸易壁垒不仅有利于本地区厂商在本地市场中获得较大的市场份额(即地方保护效应),而且还可以增加本地区厂商的利润(即利润转移效应),并增加本地区的福利;但当所有地方政府都采取贸易保护政策时,会导致所有区域福利水平的降低,从而导致一国整体国民福利的损失。这一结论为中央政府采取相应的措施协调国内区际贸易政策以消除国内市场分割提供了理论依据。     

Wage rigidity and job creation

Recent research in macroeconomics emphasizes the role of wage rigidity in accounting for the volatility of unemployment fluctuations. We use worker-level data from the CPS to measure the sensitivity of wages of newly hired workers to changes in aggregate labor market conditions. The wage of new hires, unlike the aggregate wage, is volatile and responds almost one-to-one to changes in labor productivity. We conclude that there is little evidence for wage rigidity in the data.