Price dispersion and optimal price categories with limited memory consumers

In this paper, we study consumers with limited memory and examine the effects of their price categorization on the pricing strategies of competing firms. The valuations of consumers are assumed to be heterogeneous. We find that it is possible to observe price dispersion even when each firm charges a single price if the consumers categorize prices non‐optimally. Moreover, we demonstrate that the likelihood of a price dispersion outcome is reduced when consumers with limited memory set up the price categories optimally. These findings suggest that the consumers' limited memory and their sub‐optimal behavior, that is, their inability to choose price categories optimally can be a reason for observed price dispersion.     

A child health production function estimated from longitudinal data. Cebu Study Team

Collaborating researchers used a multi equation model to analyze 3080 mother-infant pairs living on the island of Cebu in the central Philippines and to estimate a child health production function. The econometric methods used eliminated obstacles such as heterogeneity and endogeneity of significant explanatory factors. They also maximized the longitudinal quality of the data. The results showed that morbidity in 1 period reduced infant weight in following periods. For example, diarrhea and febrile respiratory infection reduced growth in the time period following the illnesses. Further effects of some contributing factors were great near birth not diminished with age. For example, breast feeding promoted growth and protected against infection, especially diarrhea and febrile respiratory infection, more substantially near birth than it did later. Further, in urban areas, preventive health care positively affected growth independently of its indirect influence on reducing respiratory infection. Yet it had little effect on diarrhea. Diarrhea had a strong adverse effect on growth. Exposure of the infant to enteric pathogens had the greatest influence on production of diarrhea. In urban areas, exposure included water supply contamination, exposure to feces, a more pathogenic diet, and community crowding. In rural areas, however, exposure included community crowding and increased rainfall which presumably washed feces into the water supply. Household crowding in both urban and rural areas and irritation from smoke in urban areas only tended to bring about febrile respiratory infection.     

Asymmetric effects of industrial production,money supply and exchange rate changes on stock returns in Turkey

The aim of this article is twofold: First, it examines the asymmetric effects of industrial production, money supply and RER on stock returns in Turkey by using the non-linear autoregressive distributed lag (NARDL) model over the periods of 1994:01–2017:05 and 2002:01–2017:05. Second, it tries to determine whether there is a change of these macroeconomic variables’ effects on stock returns after the 2001 financial crisis since after 2002 period represents a structural break from the past in terms of economic, political and macroeconomic policy approaches. The study finds that the effects of the changes in industrial production, money supply and RER on stock returns are asymmetric, and the asymmetries are larger after the 2002 subsample compared to the full sample period. The empirical results further suggest that tight monetary policies appear to retard the stock returns more than easy monetary policies that stimulate them.     

A solution to log of dependent variables with negative observations

Journal of Productivity Analysis - Negative observations pose a problem in econometric models that apply log-transformation to the data. We propose a simple yet effective solution to this problem...     

Does Fiscal Decentralization Promote Fiscal Discipline?

We investigate the efficiency and equity implications of a redistributive rule that takes into account both local tax collection efforts and deviation of local incomes from respective targets under alternative fiscal mechanisms. We show that, if the general budget constraint is binding, the proposed transfer rule leads to higher fiscal discipline under fiscal decentralization (FD) than under centralized redistribution. Although the centralized decision yields better income distribution than FD, FD also improves income distribution unambiguously when equalization across regions is targeted explicitly. When localities act strategically, the private sector’s utility weight enhances the disciplinary effect of decentralization.     

Battese-coelli estimator with endogenous regressors

We provide a framework for dealing with the endogeneity problem in the Battese-Coelli estimator for productive efficiency measurement.     

Understanding Market-Driving Behavior: The Role of Entrepreneurship

In recent years, the marketing literature has placed significant emphasis on market-driving and proactive market-driven behavior within firms in attempts to reconceptualize the meaning of "market orientation." For their part, market-driving firms such as Starbucks, Amazon.com, Dell, and Southwest Airlines are demonstrating how business model innovation results in sustainable advantage and superior long-term performance in a wide range of industries. In this paper, we contend that market-driving behavior is distinct from a firm's market orientation, and instead is the essence of entrepreneurial action in the Schumpeterian "creative destruction" sense. It is further argued that the firm's entrepreneurial orientation interacts with other strategic orientations, in the process determining how they are manifested and, in some cases, whether they are manifested. Furthermore, entrepreneurial orientation plays a critical role in determining transitions among various strategic orientations over time. An integrative model illustrates the dynamics of the interface between marketing and entrepreneurship from both a content and process perspective. Two case studies illustrate how trajectories can be identified in the dominant strategic orientations within companies as they evolve.     

Franchisees' trust in and satisfaction with franchise partnerships

This paper aims to establish the relationship between the antecedents of trust, trust itself, and franchisee satisfaction. Taking its cue from power-dependence, international business, and social exchange theories, the paper contributes to the franchise literature by offering a more comprehensive theoretical perspective to aid understanding of trust development in and satisfaction with franchise partnerships. Drawing on a multi-sector survey of Turkish franchisees, the study provides empirical evidence of the impact of the franchisors' role performance and cultural sensitivity on franchisees' trust in and satisfaction with franchise partnerships. Furthermore, this research demonstrates the central role of communication in the development of franchisees' trust.     

Information Unraveling Revisited: Disclosure of Horizontal Attributes

This paper analyzes in a spatial framework how much information a seller discloses about the variety he sells when he faces a buyer with a privately known taste for variety. I identify an equilibrium in which, for each possible variety, the seller's optimal strategy consists of either fully disclosing the variety or disclosing how far it is from the buyer's expected taste. The set of varieties the seller fully discloses monotonically expands as the buyer's taste for variety becomes stronger. I show that this is the unique undefeated equilibrium. From a policy perspective, mandating full disclosure is socially harmful.