Productivity and technical change: the case of Taiwan

This paper analyses productivity growth in 16 of Taiwan's manufacturing industries during the period 1978–1992. The non-parametric Data Envelopment Analysis approach is used to compute Malmquist productivity indexes. These are decomposed into efficiency change and technical change. The latter is further decomposed into an output bias, an input bias and a magnitude component. In addition, the direction of input bias is identified. Empirical results indicate that the sector's TFP increased at a rate of 2.89% per annum, which could be ascribed to a technical progress (2.56%) and an efficiency improvement (0.33%).     

Buyer search and price dispersion: a laboratory study

We study markets with costly buyer search in which sellers simultaneously post prices. Buyers costlessly observe one or (with probability 1−q) two of the posted prices, and can accept one or pay to search again. The experiment varies q, the search cost, and the number of buyers. Equilibrium theory predicts a unified very low (high) price for q=0 (q=1) and predicts specific distributions of dispersed prices for q=1/3 and 2/3. Actual prices conform closely to the predictions in some treatments. Buyers’ reservation prices are biased away from the extremes, however, and sellers’ prices have positive autocorrelation and cross-sectional correlation.     

World Productivity Growth: A Model Averaging Approach

Policy makers and the economic researchers who provide them estimates of economic activity need to have an informative and scientifically‐based method to develop a consensus estimate for the most basic of the productivity measures, total factor productivity (TFP) growth. We discuss methods to combine the various estimates based on different empirical specifications that model and estimate productivity growth. We also discuss the various econometric approaches used in the profession to estimate productivity growth. Our focus is on world TFP growth.     

Research Productivity in Business Economics: A Reply

Abstract. We reply to a comment by Diamantopoulos and Wagner questioning the face validity of our research productivity ranking for the field 'Marketing and Sales'.     

Information in the hiring process: A case study

A variety of theoretical models have been concerned with the extent to which economic agents base their decisions on full information. This paper describes the stages of the hiring process for secretaries in a large conglomerate, the information sources used at each stage, and then estimates the relative importance of each source. Almost all applicants are interviewed when they apply and the interviewer's comments are a significant source of information. But in spite of the firm's use of complex information, it appears that the people hired are not likely to do well than those applicants not hired.     

Foreign investment and industrial transformation: A Brazilian case study

The causes and consequences of ‘denationalization’, that is, the shift from local to foreign ownership, are examined for the case of the Brazilian pharmaceutical industry. The negative consequences that have been attributed to denationalization by 'dependency theory' are substantiated, but only in part. It is argued that the most interesting contrasts are not between the behavior of foreign and local firms in the industry but between the private sector and a recently created state enterprise, and that future analysis of dependent capitalist development should focus on the interaction of the state and foreign capital.     

Organizational failures and wage determination: A historical case study

In large U.S. firms during the first half of the twentieth century, bureaucratic, centrally administered wage determination began to replace delegation of wage setting to lower-level managers. This transition was in part caused by internal organizational problems firms confronted as they attempted to manage the principal-agent problem inherent in delegating wage determination. A single-firm case study examines the events surrounding one firm's adoption of centrally administered wage setting and documents the increased cross-plant uniformity in wage rates and decreased wage-rate flexibility that were the result of the new system.     

Future Markets-Radar: A case study of applied strategic foresight

This article describes a project in corporate practice. A large European corporation conducted a project called ‘Future Markets-Radar’ to identify future market opportunities that lie beyond their present attention. The top executives, who were deeply involved in the project, used a systematic process based on the author's Five Futures Glasses and a comprehensive semantic model of objects of thought, called the Eltville Model and a set of appropriate tools to achieve the goals of the project. The results laid the foundation for future success in future markets, solidified and enriched the corporate strategy and increased the future competence of the people involved. This article proposes a model of the corporate disciplines and goals of future management, a definition of what a future market is, key questions on future markets, a process for early recognition of future markets as well as a summary of the project's results and benefits.     

An experimental study of price dispersion

We report an experiment examining a simple clearinghouse model that generates price dispersion. According to this model, price dispersion arises because of consumer heterogeneity—some consumers are “informed” and simply buy from the firm offering the lowest price, while the remaining consumers are “captive” and shop based on considerations other than price. In our experiment we observe substantial and persistent price dispersion. We find that, as predicted, an increase in the fraction of informed consumers leads to more competitive pricing for all consumers. We also find, as predicted, that when more firms enter the market, prices to informed consumers become more competitive while prices to captive customers become less competitive. Thus, our experiment provides strong support for the model's comparative static predictions about how changes in market structure affect pricing.     

Why energy transitions matter: A case study of methanol

The 1990 Clean Air Act Amendments (CAAA) contain several new provisions governing emissions from motor vehicles. These provisions of the 1990 CAAA will have a dramatic impact on the type of cars people drive over the coming decades. Given the high cost of achieving further reductions from automobiles, there has been increasing interest in exploring alternative fuels that improve environmental quality. One important contribution of this study is to highlight the importance of considering transition issues in assessing the cost of alternative fuels. A second contribution of this paper is to demonstrate how the cost-effectiveness of methanol and M85 depends on how a methanol-based strategy is implemented. The analysis of the costs and effectiveness of methanol and gasoline leads to the following conclusions: (1) transition issues are critical in evaluating the cost and cost-effectiveness of methanol-based fuels; (2) M85 and M100 are likely to be expensive relative to conventional gasoline, particularly in the near term and short term; (3) cost-effectiveness varies dramatically by region, with Los Angeles and New York substantially better than Houston; and (4) widespread introduction of methanol is not likely to be a cost-effective approach for improving urban air quality.Mr. Hahn is a Resident Scholar at the American Enterprise Institute and an Adjunct Professor of Economics at Carnegie Mellon University. Mr. Borick was a Research Assistant at the American Enterprise Institute at the time this paper was written. Several people contributed to this paper. First and foremost, we would like to thank Armistead Russell for help in characterizing vehicle emissions. In addition, we would like to thank Jeff Alson, Vann Bussman, Alex Cristofaro, Mark DeLuchi, Carmen Difiglio, Alan Dunker, Art Fraas, John Heller, Bruce Henning, Russell Jones, Walt Kreucher, Alan Krupnick, Tom Lareau, William Leney, Ben Massell, Alan Mawdsley, Al McGartland, Greg McRae, Bob Oglesby, Dan Sperling, Brian Sullivan, Dan Townsend, Margaret Walls, Douglas Youngblood, Marty Zimmerman, and Don Zinger. This paper represents the views of the authors and does not necessarily reflect the views of any individuals or institutions with which the authors are affiliated.     

Price dispersion in the private health insurance industry: The case of Catalonia

This paper presents a vertical and horizontal product differentiation model that explains price dispersion among different kinds of health care insurance firms. Our model shows large insurance firms engaging in price competition with small mutual organizations that serve only a local area and charge lower premiums. We found that, although the market allows the entry of an excessive number of firms, the presence of local insurance companies increases social welfare by increasing the range of products available to consumers. Our conclusions are applicable to OECD countries in general although we rely on Catalonia's data.     

A macroeconometric framework for monetary policy evaluation: A case study of Pakistan

This paper attempts to establish the quantitative importance of the various channels of monetary transmission by constructing, estimating and simulating a small macroeconometric model of Pakistan's monetary sector, while using data from the monetary statistics and the monetary survey of the State Bank of Pakistan over 1976–2007. The paper elucidates that the key feature of the study of monetary policy in Pakistan has been preoccupied with neglect either of the demand or the supply function of money and shows how this may lead to imprecise policy actions and mistaken conclusions. Accordingly, we delineate the transmission mechanism of monetary policy by taking into consideration all structural money demand and money supply linkages along with the historically implied identifying assumption in the framework of a marginalized macroeconometric model. The within-sample and out-of-sample evaluations of the model are found satisfactory. The paper presents results of three policy simulations from the estimated model that highlight the impact of alternative monetary policy instruments on the monetary variables under a rule-based and a discretionary policy environment. We find that (i) the SBP subscribes to an unannounced monetary policy rule, (ii) the determination of the policy rate under the announced rule environment stabilizes the monetary sector in that convergence to full equilibrium is smooth and rapid, (iii) a 100 bps reduction in the discount rate, ceteris paribus, decreases money supply by 4.97%, and (iv) the long term implication of reducing (increasing) the reserve requirement ratio on time (demand) deposits, ceteris paribus, is only higher inflation. Finally, we establish that a 100 bps increase in interest rate increases money supply by 3.14% in full equilibrium.     

Research collaboration and behavioural additionality: A New Zealand case study

Generating the greatest benefit from public research programmes is a major aim for industry managers and policy administrators alike. However, how to measure whether benefit has occurred createsf a considerable dilemma for managers and policy-makers. One approach centres upon the concept of 'additionality' or 'what difference the policy has made'. Traditional 'input additionality' measures of subsequent research and development activity, for example, neither incorporate all impacts nor give adequate signals about adequate signals about aspects of 'output additionality', such as the impact on increased competitiveness at the level of the firm, or national competitiveness, the ultimate goal for the majority of research policies. An intermediate form of impact, 'behavioural additionality', centred upon changes in a firm's subsequent managerial behaviour, is considered to provide an alternative, yet compelling perspective on the impact of public support on the conduct of research. This study outlines empirical eveidence found for the various forms of additionality in a New Zealand collaborative research programme. It discusses how managers and policy administrators can exploit the occrrence of behavioural additionality to maximize the impact of a research policy, on the basis that modified behaviour is likely to strengthen a policy' latent abilityto influence the creation of output additionality. In such circumstances, the study suggests that managers and policy-makers should be identifying those interventions that lead to sustained improvements in mangerial practice, and in competitiveness, and should be managing their diffusion within firms and throughout industries.