Incumbent strategic behavior in financial markets and the exit of entrepreneurial start‐ups

This paper empirically investigates the forces that shape the post‐entry exit probability of entrepreneurial start‐ups, with an emphasis on the impact of incumbents' strategic behavior in financial markets. We find that entrepreneurial start‐ups in highly competitive industries are more likely to exit and that leverage compounds this exit risk. However, the latter result only holds when potential adverse selection and moral hazard problems in financial markets are large at start‐up. Under these circumstances, competitors can negatively influence creditors' perceptions on entrepreneurial quality or behavior through aggressive strategic actions to impede future financing and induce the start‐up's exit. Copyright © 2004 John Wiley & Sons, Ltd.     

Sorting things out: valuation of new firms in uncertain markets

New business models combined with a lack of objective operating data result in significant information asymmetry and uncertainty in the valuation of new firms in emerging markets. Information asymmetry increases the risks of both adverse selection and moral hazard. When traditional differentiators of firm quality are lacking, such as in emerging economic sectors, markets may turn to secondary information sources to filter and sort firms. We investigate the roles played by observable corporate governance characteristics as indirect indicators of new firms' potential qualitative differences. Markets may sort firms based on such characteristics because they are perceived to be correlated with desired but unobservable characteristics and actions and they lower the risks of both adverse selection and moral hazard. Our study of publicly traded U.S. Internet firms found that firm market valuation was strongly associated with corporate governance characteristics (e.g., executive and director stock‐based incentives, institutional and blockholder stock ownership, board structure, and venture capital participation). In addition, firm age moderated how markets used some quality proxies to determine firm valuation during the post‐IPO period. Copyright © 2003 John Wiley & Sons, Ltd.     

国外能源回弹效应研究进展评述

能源回弹效应是一国试图通过提高能源使用效率进而节约能源的过程中必须深入研究的问题。在我国,伴随能源使用效率的提高,能源消费仍快速增长,进一步增强了深入研究我国的能源回弹效应的必要性。然而,目前虽然国外对能源回弹效应的研究十分丰富,但国内对能源回弹效应的研究却明显不足。在对能源回弹定义探究的基础上,对国外有关能源回弹效应的理论与经验研究进展的相关文献进行了综述,旨在为这个问题的深入研究提供借鉴与参考。     

公益性公共建筑节能激励契约设计

公益性公共建筑节能一般由政府和建筑业主共同出资,而业主在节能过程中存在着特殊的行为特征,尤其是因隐藏信息和隐藏行为而导致的逆向选择和道德风险行为。在深入分析公益性公共建筑节能激励机理基础上,运用激励理论,建立了政府和公益性公共建筑业主之间的委托—代理模型,并分别在完全信息和不对称信息下求解了相应的激励契约。研究得出了两种情况下激励契约的一些特征,同时,也为政府建议了一些可能的措施和机制,以达到激励公益性公共建筑节能的目的。     

The moral hazard of Lax FCC land use oversight for advanced network infrastructure

This article discusses issues that arise when service providers place network equipment on publicly owned lands in the United States. Based on land use policy at the Federal Communications Commission, this paper theorizes that the use of public lands for 5G network development will create a moral hazard, as service providers may be tempted to take risks in the way they use public lands. Per economic theory the firm could behave recklessly when knowing that the costs will be borne by someone else – in this case local citizens. This is an example of the moral hazard problem in economics.     

Discrete forecast horizons for two-product variants of the dynamic lot-size problem

Motivated by the recent success of integer programming based procedures for computing discrete forecast horizons, we consider two-product variants of the classical dynamic lot-size model. In the first variant, we impose a warehouse capacity constraint on the total ending inventory of the two products in any period. In the second variant, the two products have both individual and joint setup costs for production. To our knowledge, there are no known procedures for computing forecast horizons for these variants.Under the assumption that future demands are discrete, we characterize forecast horizons for these two variants as feasibility/optimality questions in 0–1 mixed integer programs. A detailed computational study establishes the effectiveness of our approach and enables us to gain valuable insights into the behavior of minimal forecast horizons.     

加氢裂化装置节能对策探讨

加氢裂化原料逐渐重质化、劣质化,带来3种不利因素:一是腐蚀增加,尤其是氢气阀门内漏造成氢气浪费;二是易于结垢,对原料油高压换热器运行带来潜在的不利因素;三是燃料用量上升。因此重视和积极实施节能对策,对加氢裂化装置的长周期运转起着决定性的作用。文章对加氢裂化装置历年来采取的节能新技术、新装备和新举措进行了回顾总结。     

Policy globalization and the “information society”: a view from Canada

The Canadian example suggests that recent shifts in communication policy frameworks should be understood as a transformation in how technology is organized politically, and not simply as a policy reaction to technological innovation. The process is tracked chronologically in three sections: institutional renewal (1993–1994); accelerated vertical slippage between national, regional and global policy levels (1995–1996); and horizontal dispersal of communication policy into new other sectors (1997). Across these stages, a series of convergences characterized by increased fluidity between territorial as well as sectoral jurisdictions are discussed; implications for the understanding of communication policy frameworks within the context of the “information society” project are identified.     

The Survival of New Products

We study the survival of new products in a market with horizontal product differentiation and rapid product turnover. Our data set consists of monthly sales for all new products in the Swedish beer market during 1989–1995. Results show that products with low and decreasing market shares have high hazard rates. The hazard rates are also dependent on firm characteristics; products from firms with the largest market shares face a greater risk of being withdrawn. We argue that high hazard rates of new products can help to explain high failure rates of new firms.     

The optimal regulation of a risky monopoly

We study the potential conflict between cost minimization and investment in prevention for a risky venture. A natural monopoly is regulated i) for economic purposes; ii) because it can cause losses of substantial size to third parties (the environment or people). The regulator observes the production cost without being able to distinguish the initial type (an adverse selection parameter) from the effort (a moral hazard variable). In addition, the investment in prevention is non observable (another moral hazard variable) and the monopoly is protected by limited liability. We fully characterize the optimal regulation in this context of asymmetric information plus limited liability. We show that incentives to reduce cost and to invest in safety are always compatible. But, in some cases, higher rents have to be given up by the regulator.     

Crop biotechnology and the African farmer

Recent reports, workshops and meetings on GM (Genetically Modified) crops tend to characterize GM food production as a solution to Africa’s food crisis. However, GM crops are currently grown commercially in only one country in Africa – South Africa. Biotechnology tools range from tissue culture to molecular breeding and genetic engineering. This paper focuses on GM crop improvement and analyzes the development of seven GM crops (six food staples and cotton) over the past 15 years in Africa. The case studies reveal a number of unexpected scientific, legal, economic and political barriers to the development of GM crops and long delays in developing and implementing national biosafety regulations and guidelines. We conclude that most GM crops are at least 10–15 years or longer from reaching smallholder farmers in Africa. During this time special attention should be given to strengthening conventional plant breeding programs in NARS (National Agricultural Research Systems), African universities and the CGIAR. Biotechnology approaches must be nested and integrated into plant breeding programs. Special attention should also be given to raising public awareness of biotechnology, mobilizing political support and commitment to strengthening African capacity in biotechnology, biosafety, food safety and IPR (Intellectual Property Rights) and mounting long-term training programs to train the next generation of African plant breeders and GM crop specialists.     

Why is This Show so Dumb? Advertising Revenue and Program Content of Network Television

Economists have long debated how advertising should be treated in a rational-choice framework. Using unique data from the broadcast networks’ 1995 Fall Network Season, we find that sitcoms attract premia from advertisers, while news and police programs get discounted. We interpret our findings according to two important theoretical treatments of advertising. Because the broadcast networks forgo advertising-unfriendly program content, the cable channel HBO responds with a deliberate counter-programming niche strategy, explicitly airing programming with “darker” and “more difficult” advertising-unfriendly content.“The networks have essentially by given up on viewers with functional IQ’s.” – Dean Valentine, President of UPNThe views in this paper are my own and do not represent the views of the Federal Communications Commission, its Commissioners, or its staff.     

Impact of telecommuting on mass transit congestion: the Tokyo case

Telecommuting, a dispersed style of commuting enabled by developments in info-communication technology, is becoming increasingly popular among Japanese white-collar employees. According to our estimates, 9–14 million employees will telecommute by 2010, which will result in a 6.9–10.9% reduction in congestion in Tokyo, Japan. Associated cost savings are equivalent to 7.9–26.4% of annual spending on public transportation. Due to the considerable size of these positive external effects, some degree of policy support will be necessary to achieve a socially optimal level of penetration by telecommuting.     

Auctions with contingent payments — An overview

I survey a literature on auctions with contingent payments, that is auctions in which payments are allowed to depend on an ex-post verifiable variable, such as revenues in oil lease auctions. Based on DeMarzo et al. (2005), I describe a partial ranking of auction revenues for auctions that differ in terms of contract forms, pricing rules and seller commitment and why the revenue equivalence theorem does not apply even in an independent private values setup. I discuss models that incorporate adverse selection, moral hazard, competition between auctioneers, common values and the sale of multiple units.     

Moral Hazard and the Market for Used Automobiles

I examine a moral hazard problem faced by the owners offleet automobiles. Because fleet vehicles are generally notdriven by their owners, the drivers of these vehicles do not bearall of the costs of either neglecting or abusing the vehicle, causingthese vehicles to depreciate faster than owner-operated vehicles. Empirical estimates show that, after controlling for mileage, fleetvehicles depreciate approximately ten to thirteen percent fasterper-year than owner-driven vehicles. I argue that at least partof this increased depreciation is attributable to moral hazard.     

Agricultural credit problems and policies during the transition to a market economy in Central and Eastern Europe

This paper assesses the problems of financing Central and Eastern European agriculture during the present transitionary period and the role of government in this process. Initially the paper looks at why credit markets work imperfectly, even in well developed market economies, focusing on problems related to asymmetric information, adverse selection, moral hazard, credit rationing, optimal debt instrument choice and initial wealth. It shows why these and related problems may cause transaction costs to be so high that credit rationing and high interest rates are rational and efficient responses by lenders to the imperfect information problems of the agricultural sector. A series of specific, transition-related issues are then discussed which have worsened these problems within the Central and Eastern European agricultural sector. The potential roles of governments in solving these issues and actual observed interventions by Central and Eastern Europe governments through credit subsidies, loan guarantees and specialised agricultural lending institutions are analysed. Finally, the paper discusses how financial market innovations have solved some of the credit market problems and derives the implications for government policies.     

Determinants of Hazard Confronting New Entry: Does Financial Structure Matter?

This paper attempts to identify the determinants ofhazard confronting 219 new manufacturing firmsestablished in 1982–84 and followed up to1992 using a Cox regression model. Three sets ofvariables are combined in the analysis: firm, sectorand cohort specific. Financial, firm specificcharacteristics such as larger initial financialcapital size, conservative borrowing, heavier fixedasset commitment and lower diversification in terms ofholding other firms' assets are estimated to reducefirm hazard. Higher sectoral entry and lower sunk costsectoral requirements by increasing marketcontestability increase risk of failure together withcyclical variations.     

Risk sharing in procurement

We introduce bilateral risk aversion into the mixed adverse selection - moral hazard model of Laffont and Tirole (1986). The presence of exogenous risk interacts with the adverse selection problem in interesting ways. In particular, we show that it is never optimal to present the firm with a fixed price contract, that the efficient firm typically bears more risk than the inefficient firm, and that an increase in exogenous risk may bring about a decrease in expected cost of the project. As a by-product, we also establish that the famous ‘no-distortion-on-the top’ result in adverse selection models relies on risk neutrality of the agent.     

A dynamic industrial product model

This article reports on the development of a marketing model for industrial products to aid marketing managers in developing marketing programs on a quarterly and yearly basis. The system incorporates a market response model which relies heavily on the involvement of managers in providing inputs. The model was parameterized and tested in the context of a large manufacturer of capital goods. The results were supportive of the conceptual soundness of the moral and its utility in decision making.     

Life duration of foreign multinational subsidiaries: Evidence from UK northern manufacturing industry 1970–93

Duration analysis is employed to examine the survival of 252 foreign manufacturing plants in the UK Northern region during 1970–93. Contrary to expectations, the hazard function is approximately inverse quadratic rather than monotonic decreasing. Greenfield entrants face a lower risk of failure than acquisition entrants, particularly early in life. Acquisitions of older plants exhibit stronger survival than acquisitions of recently established plants, so that the age of (indigenous) acquired plant at the point of foreign takeover appears to matter to the survival of acquisition entrants. Plant size and industrial concentration also emerge as important. Home country of parent firm and location within region are unimportant. Consistent with the inverse U-shaped hazard function, the lognormal regression model provides a reasonably satisfactory fit to the data, certainly tighter than the Weibull model.