Innovation and Knowledge Transfer in Clustered Interorganizational Networks in Brazil

This article analyzes whether firm innovation is influenced by the transfer of knowledge among cluster firms. To test the hypotheses, we directly estimated the measurement and the structural model parameters where cooperation, workforce mobility, and institutions were defined as manifest indicators of the latent exogenous variable knowledge transfer, modeled as a second-order construct. Firm innovation was defined as a single item endogenous latent variable. We found knowledge transfer to be related to the way firms are managed vis-à-vis (a) the role of institutions as discussion arenas; (b) the adaptability of the workforce; and (c) the indirect cooperation among firms.     

Estimates of price elasticity of demand for urban freeway use with high-frequency control variables: the case of Santiago,Chile

Estimates are presented of toll and fuel price elasticities of demand for urban freeway use in Santiago, Chile. High-frequency toll and vehicle data were collected from four urban freeways for different route segments and times of day. Estimation was performed using log-linear regression models whose explanatory variables were tolls, fuel prices, city traffic levels and sets of dichotomous variables to control for daily, weekly and monthly seasonality. City traffic is a high frequency control of the activity level of the city. The elasticities to changes in tolls and fuel were all low in absolute value. The toll elasticities were below 0.05 for two freeways and 0.16 for the third, while for the fourth, which had more alternative routes, it was 0.47. The fuel price elasticities were also heterogeneous, with values of approximately 0.45 for two freeways and 0.21 for the third whereas for the fourth, which had the fewest alternatives, it was 0.07.     

Peer choice in CEO compensation

Current research shows that firms are more likely to benchmark against peers that pay their Chief Executive Officers (CEOs) higher compensation, reflecting self serving behavior. We propose an alternative explanation: the choice of highly paid peers represents a reward for unobserved CEO talent. We test this hypothesis by decomposing the effect of peer selection into talent and self serving components. Consistent with our prediction, we find that the association between a firm's selection of highly paid peers and CEO pay mostly represents compensation for CEO talent.     

The impact of flight delays on passenger demand and societal welfare

US airline passengers increasingly have access to flight delay information from online sources. As a result, air passenger travel decisions can be expected to be influenced by delay information. In addition, delays affect airline operations, resulting in increased block times on routes and, in general, higher carrier costs and airfares. This paper examines the impact of flight delays on both passenger demand and airfares. Delays are calculated against scheduled block times as well as against more idealized feasible flight times. Based on econometric estimations, welfare impacts of flight delays are calculated. We find that flight delays on a route reduce passenger demand and raise airfares, producing significant decreases in both consumer and producer welfare. Since producer welfare effects are estimated to be three times as large as consumer welfare effects, we conclude that from an economic efficiency rationale, airlines should be required to pay for the bulk of flight delay remediation efforts.     

The Rate of Return to the High/Scope Perry Preschool Program

This paper estimates the rate of return to the High/Scope Perry Preschool Program, an early intervention program targeted toward disadvantaged African-American youth. Estimates of the rate of return to the Perry program are widely cited to support the claim of substantial economic benefits from preschool education programs. Previous studies of the rate of return to this program ignore the compromises that occurred in the randomization protocol. They do not report standard errors. The rates of return estimated in this paper account for these factors. We conduct an extensive analysis of sensitivity to alternative plausible assumptions. Estimated annual social rates of return generally fall between 7-10 percent, with most estimates substantially lower than those previously reported in the literature. However, returns are generally statistically significantly different from zero for both males and females and are above the historical return on equity. Estimated benefit-to-cost ratios support this conclusion.     

Entry and Prices: Evidence from the Supermarket Sector

The purpose of this paper is to investigate the effect on prices of the entry of a large supermarket into a given location. We use a panel with data from fifteen cities in Chile for the period 1998:I–2004:IV. We correct for the potential simultaneity problem derived from the fact that entry can be a response to price differentials. We find that the entry of a hypermarket to a given city reduces relative prices in that local market by 7–11%. Most interestingly, we also find that part of this effect takes place the year before the supermarket actually opens for business.      

Gated Communities in Santiago: Wall or Frontier?

It is a widely held notion, disseminated in particular by the LA school of urban studies, that gated communities are enclaves, which not only maintain segregation but also help increase it. In Chile a more benevolent interpretation has arisen. Sabatini, C´ceres and Cerda argue that gated communities help out the poor communities that surround them. If the spatial scale of segregation is reduced — from city to local or neighborhood level — social disintegration should slow, according to their analysis. This article seeks to empirically complement and expand on Sabatini, Caceres and Cerda's position, which seems to be a better interpretation of Chilean reality than the grim picture presented by the LA school. The article is an ethnographic work based on in‐depth interviews in gated communities and a surrounding shantytown in the Huechuraba district, a lower socio‐economic class area in north‐west Santiago. The research concludes that, despite the existence of a wall that promotes community integration among so‐called equals, in conditions of spatial proximity sociability between inside and outside groups is not diminished. Thus, in Huechuraba there is no impenetrable wall separating poor and rich; equally, the walls do not seem to promote community integration within. Spatial proximity has encouraged relations mainly in the realm of functional exchange, making the creation of gated communities in poor neighborhoods a socially desirable experience, at least in the case of Santiago. En études urbaines, l'idée que les communautés privées sécurisées, gated communities, soient des enclaves qui entretiennent, et accentuent, la ségrégation est courante, notamment pour l'école de Los Angeles. Le Chili suscite une interprétation plus humaine. Selon Sabatini, Cáceres et Cerda, les communautés privées sécurisées sont un soutien pour les communautés pauvres avoisinantes. Si l'échelle spatiale de la ségrégation est réduite — de la ville au niveau local ou de quartier — la désintégration sociale devrait, d'après eux, ralentir. L'article vise à compléter et développer de façon empirique leur théorie, celle‐ci semblant traduire la réalité chilienne plus fidèlement que le sombre tableau de l'école de Los Angeles. Il s'agit ici d'un travail ethnographique qui s'appuie sur des entretiens poussés dans des communautés privées sécurisées et un bidonville du secteur de Huechuraba, zone socio‐économiquement pauvre du nord‐est de Santiago. Les recherches concluent que, malgré l'existence d'un mur qui favorise l'intégration communautaire entre soi‐disant égaux, la sociabilité entre les groupes intérieur et extérieur ne diminue pas en cas de proximité spatiale. Ainsi, à Huechuraba, il n'existe aucun mur impénétrable entre riches et pauvres; de même, les murs ne créent pas, semble‐t‐il, d'intégration communautaire dans leur enceinte. La proximité spatiale a encouragé les relations surtout dans le domaine des échanges fonctionnels, faisant de la création de communautés privées sécurisées dans les quartiers pauvres une expérience souhaitable au plan social, du moins dans le cas de Santiago.     

Institutional environment and Business Groups' resilience in Brazil

This article combines the institutional theory and political economy approaches to test hypotheses about how transitions in institutional environments affect the performance of Business Groups. Its primary hypothesis is that the different types of political connections established by Business Groups have moderating effects on this relationship. A sample of 1709 observations, from 317 distinct groups operating in Brazil between 2001 and 2009, was used in unobserved effects panel data models, which included the moderating effects of political connections. Our findings suggest that the institutional environment significantly affects Business Groups' performance and that this effect is moderated by political connections, when assessed in terms of the local or federal government as a minor shareholder of the Business Group. The moderating effects of political connections assessed through campaign donations were not conclusive.     

European banks’ executive remuneration under the new European Union regulation

We review how the new European regulation of bank executive compensation could affect the future of banking in Europe. Although there is no conclusive empirical evidence on the relation between bank executive remuneration and the financial crisis, authorities have intensively regulated the compensation of bank managers to eliminate risk-taking incentives in the financial industry. However, the new regulation could have unintended consequences of creating an adverse selection problem at European banks, reducing the number of best-performing managers available for European banks, and motivating an excessive increase in fixed remuneration over total remuneration, altering the way incentive systems work.