Analysis of product efficiency in the Korean automobile market from a consumer’s perspective

In this study we develop and describe a conceptual and methodological framework to measure technical and allocative efficiency at the product level considering consumer choice, which encompasses overall efficiency. Empirically, we combined data envelopment analysis and a discrete choice model in order to measure efficiency levels. The suggested framework is applied to the Korean automobile market. The relationship between the level of efficiency and market performance is discussed in terms of market share.     

Investors’ fear and herding in the stock market

ABSTRACT

In this article, we examine herding in three developed stock markets testing for the impact of investors’ ‘fear’ on herding estimations. To this end, we employ daily data of all listed stocks from USA, UK and Germany from January 2004 to July 2014. We examine herd behaviour applying the cross-sectional dispersion approach. Moreover, we investigate the asymmetric herding behaviour under different market states and sub-periods. The stock markets under examination provide comparable implied volatility indices which are used as a proxy for fear. As a result, apart from the standard herding estimations within and across markets, we also augment the benchmark model with the fear indicator. Our empirical results document the statistically significant impact of fear on herding estimations. Moreover, there is evidence of cross market herding as well as evidence of herding in the UK during specific sub-periods.     

Informal employment relationships and the labor market: Is there segmentation in Ukraine?

One of the most important factors that determine individuals’ quality of life and wellbeing is their position in the labor market and the type of jobs that they hold. When workers are rationed out of the formal segment of the labor market against their will, i.e., the labor market is segmented, their quality of life is limited, and their wellbeing is reduced. When they can freely choose between a formal or informal employment relationship, i.e., the labor market is integrated, their wellbeing can reach high levels even in the presence of informal employment. We, therefore, test whether the Ukrainian labor market is segmented along the formal-informal divide, slicing the data by gender and age. The analysis that we perform consist in the analysis of short-term and medium-term transitions between five employment states, unemployment and inactivity. We also analyze wage gaps of mean hourly earnings and across the entire hourly earnings distribution, controlling for time-invariant unobserved heterogeneity. According to our results segmentation is present for dependent employees: for a large part of informal employees informal employment is used as a waiting stage to enter formal salaried employment and is not voluntarily chosen. As far as self-employment is concerned the evidence is mixed regarding segmentation in the Ukrainian labor market. This heterogeneity in outcomes implies that not all informal work is associated with a low quality of life and reduced wellbeing in post-transition economies.     

Managerial perceptions of employees’ affective commitment and product innovation

In this paper we examine how managers perceive employees’ affective commitment and how this perception determines their trust as a managerial attitude toward organizational learning capability (OLC). Likewise, we study how managerial trust affects product innovation and OLC. In other words, we carry out a double mediation: firstly, we examine whether managerial trust is a mechanism through which managerial perceptions of employees’ affective commitment influences on OLC, and secondly, we study if OLC mediates between managerial trust and product innovation. By using structural equation modeling (partial least squares) on a sample of 192 Spanish firms we conclude that: (1) if managers perceive employees to be affectively committed, they will be willing to enhance OLC and to trust them; (2) managerial trust favors OLC and product innovation and (3) OLC appears to exert a full mediation between managerial trust and product innovation.     

The impact of product market competition on GDP per capita growth in the EU countries: does the model of capitalism matter?

This article assesses whether the intensity of product market competition is a factor affecting economic growth (measured by the growth rate of real GDP per capita) and whether this impact depends on the model of capitalism. The study covers the 1997–2015 period and all EU28 countries. Product market competition is measured by two types of variables: product market regulation indicators and the number of enterprises. New elements in the analysis include, among others, nonlinear impact and overlapping observations. The regression equations are estimated on the basis of Blundell and Bond’s GMM system estimator. The results generally indicate that stronger product market regulations (and theoretically lower product market competition) are linked with faster growth of output. However, the impact of product market competition on economic growth depends on the type of capitalism. For post-socialist countries, unlike the Western European model of capitalism, more regulation tends to reduce the rate of economic growth.     

What are the determinants of hiring? The importance of product market demand and search frictions

In this article, we study the importance of product market demand and search frictions for hiring. We use a search-matching model with imperfect competition in the product market to derive an equation for total hiring in a local labour market, and estimate it on Swedish panel data. If product markets are imperfectly competitive, product demand shocks should have a direct effect on employment for given levels of prices and wages. Our main finding is that product demand has such a direct effect on hiring. This highlights the importance of taking imperfect competition in the product market into account in studies of employment dynamics and hiring. We also find that, for given levels of prices, wages, and product demand, the number of unemployed workers in a local labour market has a positive effect on hiring, suggesting that search frictions matter. Quantitatively, product demand shocks seem to be more important for understanding the variation in hiring than shocks to the number of unemployed workers.     

To market,to market: imperial capitalism’s destruction of social capital and the family

The market, far from being the sine qua non for modern society in general, and the family in particular, has eroded the social fiber that gives shape and resilience to the experiences of individuals, families, and ultimately, the market itself. Reviewing both historical and feminist analysis of the family in a capitalist market society, it is clear that the modern market is imperial. Not only does it transform every human interaction into a transient market exchange, it undermines the basis for social reproduction through the family. Using the concept of social capital as a primary analytical tool, this paper argues that the distinction between home and market labor has been unnecessarily polarized, limiting policy options. Thus, society’s ability to produce and maintain long-standing social networks is put at risk, paradoxically reducing the market’s ability to perform efficiently.JEL Categories: D10; J22; J16     

China’s competition and the export price strategies of developed countries

This paper analyzes the impact of Chinese competition on developed countries’ export prices. The empirical application is on Italy, one of the main European manufacturing exporters with exports at high risk of competition from China. Our results show that, following China’s entry into the WTO, the price strategies of Italian firms has been affected. While in general the increasing Chinese export competition resulted in an upgrading of products exported, the impact has been different according to the sector and technological level. The incentives to upgrade have been stronger for low technology sectors, where competition is tougher and varieties of products sold lower. To highlight quality differentials, and isolate the effects on the different segments of the distribution of Italy’s export prices, we run quantile regressions. We find that are mainly those products sold at low prices to face a strong pressure to upgrade.     

Who gains from capital market integration? Tax competition between unionized and non‐unionized countries

The welfare effects of capital market integration are examined under a model of tax competition with two asymmetric countries. The asymmetry is expressed through the labour market: one country has a perfect labour market whereas the other country's labour market is unionized. Our results indicate that the welfare effects of capital market integration differ depending on whether governments are active or passive in attracting capital. In the absence of active governments, capital market integration benefits the country with a competitive labour market whereas it harms the unionized country. Capital market integration benefits both countries if governments are active and compete for mobile capital using taxes/subsidies.     

Bankruptcy in the pulp and paper industry: market’s reaction and prediction

This paper examines North American pulp and paper company bankruptcies that occurred between 1990 and 2009. We demonstrate that shareholders suffer substantial losses (37 %) during the month a bankruptcy occurs. Encouragingly, we show that financial ratios are useful in predicting firm failure and that failed firms are less profitable, more liquidity constrained and higher in debt leverage. Using a binary logit model in the spirit of Ohlson (J Acc Res, 19, 109–131, 1980), we predict financial distress for pulp and paper firms 1 to 2 years ahead of the bankruptcy. We also adapt and re-estimate the empirical model on a sample of pulp and paper firms and perform in-sample and out-of-sample forecasts. For the out-of-sample analysis, our re-estimated Ohlson models correctly predict 93 % of bankruptcy and non-bankruptcy outcomes.     

An experimental study of the impact of competition for Other People’s Money: the portfolio manager market

In this paper we experimentally investigate the impact that competing for funds has on the risk-taking behavior of laboratory portfolio managers compensated through an option-like scheme according to which the manager receives (most of) the compensation only for returns in excess of pre-specified strike price. We find that such a competitive environment and contractual arrangement lead, both in theory and in the lab, to inefficient risk taking behavior on the part of portfolio managers. We then study various policy interventions, obtained by manipulating various aspects of the competitive environment and the contractual arrangement, e.g., the Transparency of the contracts offered, the Risk Sharing component in the contract linking portfolio managers to investors, etc. While all these interventions would induce portfolio managers, at equilibrium, to efficiently invest funds in safe assets, we find that, in the lab, Transparency is most effective in incentivising managers to do so. Finally, we document a behavioral “Other People’s Money” effect in the lab, where portfolio managers tend to invest the funds of their investors in a more risky manner than their Own Money, even when it is not in either the investors’ or the managers’ interest to do so.     

Special issue: imperfect competition and contemporary macroeconomics. Editor’s introduction

This paper introduces the special issue by tracing out the history of imperfect competition in macroeconomics, particularly since 1980. It argues that in the search for a micro-foundation for nominal rigidity it was necessary to abandon the assumption of competitive equilibrium where all agents are price-takers. This led to models where firms and other optimising agents set wages and prices which were part of the new Keynesian economics of the 1980s. When these were combined with quantitative dynamic equilibrium methods it gave rise to the new neoclassical synthesis models which dominate macroeconomics today. The assumption of imperfect competition provides an equilibrium with different properties to the competitive, and one particular focus is on the relationship between the markup and the fiscal multiplier.

Firm adaptiveness and performance heterogeneity: the case of sales–advertising dynamics in an evolving product market

We combine evolutionary theory concepts and multivariate persistence methodology to develop and test expectations about the adaptiveness of firm decisions and its implications for performance heterogeneity. We focus on the relatively reversible advertising decisions in an evolving product market, domains typically ignored by evolutionary research. We find that an adaptive decision routine helps an incumbent firm maintain its advantages and overcome the challenge posed by a major competitive entry.

Endogenous product versus process innovation and a firm’s propensity to export

This article provides an empirical analysis of the effects of new product versus process innovations on export propensity at the firm level. Product innovation is a key factor for successful market entry in models of creative destruction and Schumpeterian growth. Process innovation helps securing a firm’s market position given the characteristics of its product supply. Both modes of innovation are expected to raise a firm’s propensity to export. According to new trade theory, we conjecture that product innovation is relatively more important in that regard. We investigate these hypotheses in a rich survey panel data set with information about new innovations of either type. With a set of indicators regarding innovation motives and impediments and continuous variables at the firm and industry level at hand, we may determine the probability of launching new innovations and their impact on export propensity at the firm level through a double treatment approach.     

African farmers’ market organizations and global value chains: competitiveness versus inclusiveness

Abstract

This conceptual paper discusses the challenges smallholder producer cooperatives in developing countries face while trying to access agricultural global value chains. We assess the problem of competitiveness related to lack of commitment and improper selection. Prioritization of open membership over selection is generally taken for granted in the policy debate on farmers’ market organizations (FMOs). We argue that open membership may work in community-driven organizations, however, it becomes a major threat for entrepreneurial FMOs. Inclusion facilitates free riding, which forms a barrier for investments of members. This is one of the major reasons why so many of these organizations are so much resource constrained, i.e. are not able to compete in the market without external support. FMOs should take targeting and selection serious if entrepreneurial activities are intended. Otherwise, they miss the opportunity to create a committed member base willing to invest in a potentially competitive organization.     

Commodity market stabilisation and ‘North-South’ income transfers: An empirical investigation

Commodity stabilisation agreements have often been suggested as a means of stabilising producers' revenues and redistrubuting productive resources to less developed economies (from ‘North’ to ‘South’). But no empirical estimates of how much may be expected from such agreements, nor of what they would cost to operate, have appeared. This paper examines, in the context of one market, how far prices can be stabilised by buffer stock interventions. the costs of that stabilisation, and whether any redistribution would be achieved. We find pure stabilisation leads to transfers away from the South, and that supply restrictions which force redistribution are extremely expensive. However, it is relatively cheap to protect producers on the South against the uncertainty of future revenues.     

Dynamic control of a monopolist’s product and process innovation with reference quality

ABSTRACT

Our main purpose is to investigate the dynamic control problem of a monopolist’s product and process innovation under reference quality. The main features of this article are: (i) a monopolist dealing with customer behaviour in the spirit of the principle of behaviour economics determines the product price, and carries out the activities of product and process innovation; (ii) the consumers’ demand depends on price, product quality and reference quality, and adopts an additive separable demand function form. Our main results show that under the cases of the monopolist optimum and the social planner optimum, (i) there exists an unique stable, which is a saddle-point steady-state equilibrium; (ii) the change rates of the monopolist’s investments in product and process innovation are increasing with the reference quality, while the monopolist’s steady-state investments in product and process innovation are decreasing with the reference quality; (iii) as the memory parameter increases with other parameters kept constant, it is very likely that the monopolist’s investment in process innovation be greater than the investment in product innovation; and (iv) the social incentive towards both investments in product and process innovation is always larger than the private incentive characterizing the profit-seeking monopolist.