Contracting in a Market with Differential Information

Today’s technology allows firms to collect, store and use different types of data. This has prompted a wide discussion on the effects of access to data on competition and consumer welfare. This discussion has also been present in the energy sector in which advanced technology has allowed for the collection of detailed energy consumption data. Prompted by this discussion on the energy sector, this paper studies an industry where two firms have access to the same technology and compete in prices, but one of them has access to better information about customers. The better informed firm obtains a customer contact advantage, whereas the uninformed firm can still offer a menu of prices without being able to pre-identify the customers. We show that the better informed firm is able to exclude the uninformed firm from the market. This result provides policy insights on the usefulness of considering data access models that can ensure non-discriminatory behaviour.

     

Multimarket contact and sales growth: evidence from insurance

Research on pricing, profits, and firm survival has shown that multimarket contact causes mutual forbearance against competition, but has not considered the consequences of imperfect observability of competitive moves. Here, predictions are developed to explain how mutual forbearance occurs—but sometimes fails—in markets with imperfect observability. Mutual forbearance means that firms do not seek to take market share from each other through price cuts or nonprice competition, and thus that sales grow at uniform rates. Firms defect from mutual forbearance, and hence have higher sales growth, if the potential rewards are high and the likelihood of being discovered is low. This theory is tested on a panel of firms operating in the Norwegian general insurance industry. The evidence suggests that sales growth is most rapid in firms that do not meet many multimarket competitors in a given market and firms that are economically troubled. Growing or highly concentrated markets have higher heterogeneity of growth rates. Copyright © 2007 John Wiley & Sons, Ltd.     

Public management reform in Denmark

Abstract

This article discusses public management reform in Denmark. First, the institutional features of the Danish public sector are introduced. Danish ministries enjoy a considerable amount of autonomy that makes central co-ordinated public management reform challenging. The second part of the article outlines the contents of public management reform and provides an overview of the major reform initiatives of the last three governments. Denmark's reforms are characterized as a mixture of strategies for modernization and marketization, but with most emphasis on the former rather than the latter. Together with successive governments, the Danish Ministry of Finance has argued strongly for efficiency, economy and effectiveness as key values and they have been institutionalized in modernization efforts. Denmark should now be considered a country where NPM reforms have taken a firm hold.     

Because you're worth it? Determinants of Vice Chancellor pay in the UK

Wage inequality has increased across most developed nations; this has been manifested in a wide range of organisations and sectors, with implications for well‐being and sustainability; within UK universities, this has become increasingly visible. There is increasing pressure on universities to deliver social and economic impact in an increasingly market‐driven and metric‐driven environment. In the UK context, increasing financial pressure has led to both an escalation of student fees and constrained wage growth for faculty. In contrast, most Vice Chancellors have secured substantive pay packages raising concerns that regulatory failures may be contributing to the rise. We show that Vice Chancellors use their internal power within organisations to extract a disproportionate amount of the value created by the institution. However, we encountered much diversity according to the quality of governance, highlighting the extent to which not only contextual but also internal dynamics drive wage inequality.     

ASYMMETRY OF CUSTOMER LOSS AND RECOVERY UNDER ENDOGENOUS PARTNERSHIPS: THEORY AND EVIDENCE*

This article is inspired by real‐world phenomena that firms lose customers based on imprecise information and take a long time to recover. If consumers are playing an ordinary repeated game with fixed partners, there is no clear reason why recovery happens slowly. However, if consumers are playing an endogenously repeated game, a class of simple efficient equilibria exhibits the asymmetry of fast loss and slow recovery of customers after a bad signal. Exit is systematic, but formation of a new partnership is random. We also give empirical evidence of our equilibria at an individual‐firm level.     

Bigger and safer: the diffusion of competitive advantage

Research on the diffusion of technologies that give competitive advantage is needed to understand the role of technology in competition. Predictions on which firms first obtain useful technologies are made by cluster theory, which holds that the diffusion is geographically bounded, and network theory, which holds that adoption is more rapid in central network positions. These predictions can be evaluated using data on the diffusion of supplier innovations that give competitive advantage to firms in the buyer industry. Here, the diffusion of new ship types is studied using the heterogeneous diffusion model and data on shipping firm‐shipbuilder networks, showing that valuable innovations remain rare because they are not adopted by distant firms in geographical and network space. The strong influence of geographically dispersed interfirm networks on technology diffusion justifies a greater role of interorganizational networks in the theory of competitive advantage. Copyright © 2008 John Wiley & Sons, Ltd.     

PPPs: THE PASSAGE OF TIME PERMITS A SOBER REFLECTION

This paper argues that evaluations of public–private partnerships thus far point to contradictory results regarding their effectiveness and value-for-money. Despite continuing political popularity, greater care is needed to strengthen future evaluations and conduct such assessments away from the policy cheerleaders.     

New results on the effect of maternal work hours on children's overweight status: Does the quality of child care matter?

Existing empirical research on child overweight derives mainly from North America and points at rising maternal employment as an explanation for the increasing trend in child weight. These results cannot be replicated in Denmark, where an increase in maternal work hours does not increase the likelihood of weight problems for their children. This paper tests four possible explanations for this difference: (1) the effect of maternal employment on child obesity is heterogeneous and varies according to the country's weight distribution; (2) the quality of child care is on average higher in Denmark; (3) the counterfactual care provided by Danish mothers is of lower quality; and (4) Danish fathers contribute significantly to their children's health. This paper finds evidence consistent with the hypotheses that Danish child care and fathers play a significant role in explaining the absence of a significant relationship between maternal work hours and children's overweight status.     

Paths into the economy: structural barriers and the job hunt for skilled PRC migrants in Canada

Well-educated and trained Chinese professionals immigrating to Canada face barriers in finding jobs. To understand this wastage of human capital, we see entry to the professions as mediated by frameworks. The social construction of careers influences the demand for labour. Human capital is a social construct defined by certification procedures in Canada and by the way Canadian employers perceive appropriate matches of jobs and job applicants. Their demand for people with 'Canadian experience' blocks entry into higher-level jobs. The study interviewed thirty-two couples in 1999-2001 using qualitative methods to learn about their experiences finding jobs in Toronto.