Company–Nonprofit Partnerships,Negative Spillover,and Response Strategies

This study explored whether, in the context of a company–nonprofit partnership, there are negative spillover effects when a crisis strikes a partner organization and what effective response strategies to such a crisis would be for the principal organization. We conducted an online experiment (N = 445) with a 2 (duration of partnership: long-term vs. short-term) × 4 (response strategy: denial, ending partnership, continuing partnership, vs. no response) between-subject design, with two no-crisis control groups. The results confirmed the existence of negative spillover effects; when respondents were exposed to crisis information about a partner organization, their attitude toward the principal organization became less favorable. We found that, regardless of the partnership’s duration, announcing a decision about the partnership—either ending the partnership or continuing the partnership—was not effective in restoring the principal organization’s image. Denial strategies, however, significantly improved the image of the principal organization, up to its precrisis level. We discuss the practical and theoretical implications.     

Vertical differentiation with non-uniform consumers' distribution

This note explores a vertical differentiation model with a continuous non-uniform consumers' distribution. First, a result concerning the finiteness property obtained with uniform consumers' distribution is generalized. Second, we prove an existence result of price equilibrium when the distribution is concave. Finally, we exhibit a counter-example to the existence of price equilibrium to show that the concavity assumption is not superfluous.     

Dynamic programming for valuing American options under a variance-gamma process

Lévy processes provide a solution to overcome the shortcomings of the lognormal hypothesis. A growing literature proposes the use of pure-jump Lévy processes, such as the variance-gamma (VG) model. In this setting, explicit solutions for derivative prices are unavailable, for instance, for the valuation of American options. We propose a dynamic programming approach coupled with finite elements for valuing American-style options under an extended VG model. Our numerical experiments confirm the convergence and show the efficiency of the proposed methodology. We also conduct a numerical investigation that focuses on American options on S&P 500 futures contracts.     

Oligopoly equilibria in exchange economies: a limit theorem

In a pure exchange economy, agents have the possibility of behaving strategically by putting only a part of their initial endowments on the market. An oligopoly equilibrium is defined to be a Nash equilibrium of the game in which agents choose simultaneously quantities to be put on the market. It is proved that under standard hypotheses, the oligopoly equilibrium leads to the competitive equilibrium when the economy is replicated an infinite number of times. Received: May 26, 1999; revised version: April 3, 2000     

Is partial privatization of universities a solution for higher education?

This paper accounts simply for the link between higher education and the productive economy through educated workers. We study a model of vertical successive monopolies where students/workers acquire qualification from a University then “sell” skilled labor to a monopoly which itself sells its final product to consumers, linking through quality the education sector to the labor and output markets. We determine the optimal share the State should keep in the University to compensate for the market imperfections, while taking into account the inefficiencies of public management. The resulting partially privatized University fixes the tuition fees so as to maximize a weighted sum of profits and social welfare. We derive the optimal public share under the hypothesis that the State may subsidize the tuition fees/University losses, then under the constraint that the University should make a nonnegative profit. We prove that in both cases, the State should keep a substantial share (higher under the first hypothesis) in the University, unless public management is too inefficient in which case the University's management should be completely private.     

Natural oligopolies with exogenous sunk costs: A non-Suttonian result

In a spatial competition model with exogenous fixed costs and divisible goods, we obtain non-Suttonian results. When the economy is infinitely replicated, the number of firms does go to infinity but, as consumers’ income goes to infinity, the equilibrium number of firms tends toward a finite value. This occurs because the global demand to each firm becomes in the limit infinitely sensitive to price differentials since they give then rise to infinitely large differences in purchase expenditure.     

Finiteness property with vertical and horizontal differentiation: does it really matter?

The paper proves the consistency of vertical and horizontal differentiation models regarding the finiteness property. In the case of constant returns, it turns out that the attitude of consumers towards products sold at marginal costs is crucial for the finiteness property to hold or not. We first prove concerning the finiteness property results with horizontal preferences consistent with results already obtained with vertical preferences. Second we prove with vertical and horizontal preferences, a new type of result relative to the existing literature: the existence of an indifferent consumer and a population unanimous w.r.t. their most preferred variant when all variants are sold at marginal cost, is sufficient to allow to an unbounded number of firms to be active. In the case of non-constant returns, it is the cost structure in a neighborhood of the zero output that drives the market structure. Results consistent with results already proved with vertical preferences, are proved with horizontal preferences. Finally, existence results with horizontal preferences are provided to show that the demonstrated properties have cases of application.     

Natural Oligopolies: A Vertical Differentiation Model

This article contains a more complete characterization of conditions under which vertically differentiated markets are or are not natural oligopolies than has been found previously in the literature. Specifically, previous results on markets in which firms have cost functions with constant returns are incomplete; these results are expanded. Moreover, results are provided for markets with firms having increasing or decreasing marginal cost functions.     

Is targeted advertising always beneficial?

In this paper, we study a simple model in which two horizontally differentiated firms compete in prices and targeted advertising on an initially uninformed market. First, the Nash equilibrium is fully characterized. We prove that when the advertising cost is low, firms target only their “natural markets”, while they cross-advertise when this cost is high. Second, the outcome at equilibrium is compared with random advertising. Surprisingly, we prove that firms' equilibrium profits may be lower with targeted advertising relative to random advertising, while firms are given more options with targeted advertising.     

The Intertemporal Relationship Between the Currency Spot Market and the Currency Option Market

This study examines the lead/lag relationship between currency option and currency spot markets for the Deutsche mark and the Japanese yen. Using intraday currency option transactions data for the year 1989 and applying a European type currency option pricing model, pair data series of the implied and the observed exchange rates are compiled. Causality tests are then employed to test the causal relation between the observed and the implied exchange rate changes. The results indicate that the currency spot market leads the currency option market by about ninety minutes.