Efficient Liability Rules: Complete Characterization

Received May, 18, 2000; revised version received March, 19, 2001     

Does success diminish competitive responsiveness? Reconciling conflicting perspectives

Previous research provides conflicting evidence of the association between the past performance of a business and its competitive responsiveness, with researchers observing both positive and negative relationships. To clarify this issue, the authors test a model using survey data from the retailing industry. The model delineates direct and indirect mediated paths through ability to respond, motivation to respond, and awareness of competitors’ actions to show how past performance can have both positive and negative influence on competitive responsiveness. However, the overall impact of past performance of an organization on its competitive responsiveness is positive. The implications of these findings for research, practice, and theory are discussed. Satish Jayachandran (satish@moore.sc.edu) is an assistant professor of marketing in the Moore School of Business at the University of South Carolina. His research interests are focused on issues related to the market responsiveness of firms. His research has been published in theJournal of Marketing and theJournal of the Academy of Marketing Science. He was a recipient of the Harold H. Maynard Award for 2001 from theJournal of Marketing. He was nominated a young scholar by the Marketing Science Institute in 2003. Rajan Varadarajan (varadarajan@tamu.edu) is Distinguished Professor of Marketing and holder of the Ford Chair in marketing and e-commerce at Texas A & M University. His teaching and research interests are in the areas of strategy, international marketing, and e-commerce. His research on these topics has been published in theJournal of Marketing, theJournal of the Academy of Marketing Science, theAcademy of Management Journal, Strategic Management Journal, Sloan Management Review, California Management Review, Business Horizons, theJournal of Business Research, and other journals.     

A note on odds in the cattle futures market

This paper investigates the odds of generating a 100-fold return in the cattle futures market. We employ cattle futures data for the period October 11, 1978, through July 31, 1979, to compute the probability of obtaining such a return. The tests are constructed to give the investor the benefit of the doubt whenever doubt exists. The most conservative finding is that the probability is one in approximately thirty-one trillion. Assuming that the return is made in the most efficient way possible, this probability falls to approximately 1.5×10⁻¹⁶.     

Tofacitinib in the treatment of moderate-to-severe rheumatoid arthritis: a cost-effectiveness analysis compared with adalimumab in Taiwan

Aims: Tofacitinib is an oral Janus kinase inhibitor for the treatment of rheumatoid arthritis (RA). This analysis investigated the cost-effectiveness of the second-line treatment with tofacitinib, compared with adalimumab, both plus methotrexate (MTX), in patients with moderate-to-severe RA and an inadequate response to the first-line MTX, from a Taiwan National Health Insurance Administration perspective.

Materials and methods: A patient-level simulation model was used to project lifetime costs and quality-adjusted life-years (QALYs). Base-case analysis compared second-line treatment with tofacitinib 5?mg twice daily plus MTX vs adalimumab 40?mg every 2?weeks plus MTX. Patients switched or discontinued treatment due to a lack or loss of effectiveness or a serious adverse event. Efficacy was measured by change in Health Assessment Questionnaire-Disability Index (HAQ-DI) score. HAQ-DI scores were used to predict mortality and resource utilization, and were mapped onto utility values to estimate QALYs. Efficacy and safety data were derived from clinical trials and other secondary sources. Uncertainty in model parameters was explored using one-way deterministic and probabilistic sensitivity analyses.

Results: Patients gained 0.09 more QALYs with second-line tofacitinib plus MTX compared with adalimumab plus MTX (5.13 vs 5.04, respectively) at an additional cost of New Taiwan Dollars (NT$) 12,881. The incremental cost-effectiveness ratio was NT$143,122/QALY. One-way sensitivity analysis confirmed the base-case result was robust.

Limitations: The lack of available clinical data, particularly for HAQ-DI scores, may introduce some bias in the analysis. No patients were in an early stage of RA, which may limit the generalizability of these results. Base-case results from our study are not necessarily generalizable to countries with healthcare systems that differ considerably from Taiwan.

Conclusions: From a payer perspective, second-line treatment with tofacitinib plus MTX is a cost-effective treatment strategy, compared with adalimumab plus MTX, in patients with moderate-to-severe RA in Taiwan.

Trial registration: ClinicalTrials.gov identifier: NCT00853385.     

Modelling the dynamics of Bitcoin and Litecoin: GARCH versus stochastic volatility models

We examine and compare a large number of generalized autoregressive conditional heteroskedastic (GARCH) and stochastic volatility (SV) models using series of Bitcoin and Litecoin price returns to assess the model fit for dynamics of these cryptocurrency price returns series. The various models examined include the standard GARCH(1,1) and SV with an AR(1) log-volatility process, as well as more flexible models with jumps, volatility in mean, leverage effects, t-distributed and moving average innovations. We report that the best model for Bitcoin is SV-t while it is GARCH-t for Litecoin. Overall, the t-class of models performs better than other classes for both cryptocurrencies. For Bitcoin, the SV models consistently outperform the GARCH models and the same holds true for Litecoin in most cases. Finally, the comparison of GARCH models with GARCH-GJR models reveals that the leverage effect is not significant for cryptocurrencies, suggesting that these do not behave like stock prices.     

Blocked But Not Tackled: Who Founds New Firms When Rivals Dissolve?

Research summary: This article examines the role of competitive shocks in creating opportunities for new firm foundings. I argue that the sudden dissolution of rival firms may release resources that create opportunities for firm formation, particularly among employees facing impediments to capturing value in their current organizations. Analyzing microdata from the legal services industry, I use unexpected deaths of solo‐practicing attorneys as quasi‐exogenous sources of rival dissolution. Results indicate that these shocks increase the odds of founding by about 30%, with stronger effects among attorneys with weaker social connections or higher competition for promotion. The article thus highlights the role that founders play in reallocating dissolved rivals' resources while demonstrating that founding may be an important outlet for “blocked” employees to capture value from opportunities. Managerial summary: This article finds that the shutdown and dissolution of a rival organization may spur employees to found new firms. As a consequence, managers may find it valuable to pay attention to employees' turnover intentions following the dissolution of a rival. Findings suggest that employees who are having trouble advancing in the firm may be the most likely to found a new organization when a rival dissolves, so managers may want to focus retention efforts on these individuals. To the extent that managers wish to capture customers, employees, and other resources that were formerly attached to a dissolved rival, managers may wish to be aware that they could be in competition with their own employees for these resources and opportunities. Copyright © 2017 John Wiley & Sons, Ltd.     

Measuring stress in money markets: A dynamic factor approach

We extract an index of interest rate spreads from various money market segments to assess the level of funding stress in real time. We find that during the 2007–2009 financial crisis, money markets switched between low and high stress regimes except for brief periods of extreme stress. Transitions to lower stress regimes are typically associated with the non-standard policy measures by the Federal Reserve.     

Super returns to Super Bowl ads?

This paper uses a natural experiment—the Super Bowl—to study the causal effect of advertising on demand for movies. Identification of the causal effect rests on two points: 1) Super Bowl ads are purchased before advertisers know which teams will play; 2) home cities of the teams that are playing will have proportionally more viewers than viewers in other cities. We find that the movies in our sample experience on average incremental opening weekend ticket sales of about $8.4 million from a $3 million Super Bowl advertisement.     

Product and environmental social performance: Varying effect on firm performance

Corporate social performance (CSP) consists of actions in different domains that vary in the information they provide stakeholders, and hence, in their effect on firm performance. To demonstrate this, the authors examine the impact of CSP on firm performance in two areas—the product and the environment, referred to as product social performance (PSP) and environmental social performance (ESP), respectively. PSP has a stronger positive impact on firm performance compared to ESP. The findings using disaggregated measures of PSP and ESP indicate negativity bias in that PSP weakness has a stronger negative impact on firm performance compared to PSP strength. Copyright © 2013 John Wiley & Sons, Ltd.