A Multivariate Commodity Analysis with Time-Dependent Volatility—Evidence from the German Energy Market

In recent years commodity markets (in particular electricity, coal, and emissions) encountered extreme price movements and phases of high price volatility. Utility companies are naturally exposed to these kinds of market movements and thus have to set-up an appropriate risk management system. We show that the nonstationary behavior of recent energy prices can be captured by time-dependent (and possibly stochastic) volatility models. We compare their statistical performance and their impact on risk management applications by calculating risk metrics such as value-at-risk. Based on a comprehensive backtesting study we conclude that our suggested models outperform stationary models in most cases and therefore should be considered superior for risk management applications.     

How Do Firms Finance Nonprimary Market Investments? Evidence from REITs

This study explores the impact of investment characteristics, mainly investment location relative to the firm's primary market, on financing choices by real estate investment trusts (REITs). Using a large sample of commercial property acquisitions, we show that REITs are 4–8% less likely to use secured (mortgage) debt when acquiring properties in their primary markets than elsewhere. The documented evidence supports a demand‐side story for the relation between investment characteristics and financing. Moreover, the evidence is consistent with the hypothesis that REITs avoid mortgage financing in their primary markets to preserve operational flexibility in those markets.     

Does Increasing the Market Share of Smaller Firms Result in Lower Prices? Empirical Evidence from the Canadian Retail Gasoline Industry

Some recent policy initiatives aimed at preserving the market share of smaller or independent gasoline retailers have either been implemented or proposed in both Canada and the United States. Employing monthly data on average retail prices and market shares across eleven Canadian cities between 1991 and 1997, I find that more aggregate market share in the hands of independent retailers is correlated with higher retail prices, but indirectly associated with lower prices through the corresponding fall in market concentration among vertically integrated firms. The sum of these impacts is negative as indirect effects are larger in magnitude than corresponding direct effects.JEL classification : L1, L4     

Affective commitment,home-based working and the blurring of work–home boundaries: Evidence from Germany

Analysis of data from the representative German Linked Personnel Panel revealed that, overall, the use of home-based working is associated with a higher affective organisational commitment on the part of employees. However, this is less often the case when the use of home-based working involves the blurring of work–home boundaries. Perceived trust and fairness on the part of supervisors mediates the association between employees' experiences with working from home and their affective commitment. These results show that experiences with home-based working shape employees' perceptions of trust and fairness in their exchange relations with supervisors and thus their affective commitment to the organisation. Employees' experiences with home-based working that reflect its supportive implementation by their employers and supervisors are critical for their commitment. Our results provide the first evidence that in exchange relations between employees and supervisors, perceived fairness is as important as perceived trust.     

Firms’ Beliefs and Learning: Models,Identification, and Empirical Evidence

Review of Industrial Organization - This paper reviews recent literature on structural models of oligopoly competition where firms have biased beliefs about the primitives of the model—e.g....     

How Does Market Making Affect Industrial Relations? Evidence from Eight German Hospitals

The introduction of market mechanisms matters for industrial relations. In the German hospital sector, national liberalization policies have put immense pressure on local management and worker representatives and led to the growth of a low‐wage sector. In case studies of eight hospitals, we find some locales where market making has led to union revitalization and mobilization, but this effect varies. Using an eight‐way comparison, we infer a configuration of three aspects of the local political economy — labour markets, politics and co‐determination rules — that together provide a well‐fitting explanation for both variation and change.     

How do political,individual and contextual factors affect school milk demand? Empirical evidence from primary schools in Germany

Despite the subsidies provided for school milk within the European School Milk Scheme, consumption has declined steadily in Germany. Thus, a federal research project was established to analyze factors that influence the demand for school milk. The results should form a basis to improve future school milk policy. To identify the factors affecting the decisions by individual pupils to order school milk and to quantify the impact of each factor, politically induced factors, individual and context factors were considered. Price effects and the associated policy issues were derived via a price experiment in selected German primary schools, while information on weekly orders for school milk was collected at the individual level. Detailed information on the eating habits, preferences and tastes, attitudes, socio-economic circumstances and characteristics of the persons involved was obtained by administering various surveys. The respondents examined in the study included pupils, the pupils’ parents, class teachers, school milk managers (primarily janitors) and school principals.To properly account for the hierarchical structure of the dataset (pupils within classes and schools along the different price steps of the experiment), a logistic multilevel analysis was applied based on 7336 pupils from 101 schools. The free-of-charge distribution of school milk had a high positive impact in the demand decision, confirming the importance of the policy setting (e.g., availability of subsidies). Although the price had an expected negative effect, its impact is limited. In addition to socio-economic factors (e.g., age, gender, immigration background and income of households), the behavior and attitudes of pupils and parents, as well as the context or environment surrounding the school milk offering (e.g., number of school milk products, whether teachers drink milk with the pupils during the break) had an impact.     

Is profit-sharing participation?: Evidence on alternative firm types from West Germany

Systematic differences are reported in the structural and performance characteristics of firms in subsamples based on (a) profit-sharing and (b) participation-in-control (employee-involvement in decision-making). Moreover, whereas group (b) firms tend to conform to a theoretical, participatory stereotype, group (a) firms do not. The coincidence of profit-sharing and participation-in-control in a given firm is not surprisingly quite low. These results cast doubt on current theoretical and policy arguments concerning productivity gains dependent on the joint use of participation and profit-sharing, but indicate that one precondition for Weitzman-type macro-economic benefits of profit-sharing in the absence of participation may be present.     

Consumers’ Reactions to Negative Information on Product Quality: Evidence from Scanner Data

Using daily scanner data we analyze consumers’ reactions to negative information with regard to product quality with reference to a fraud that involved a number of leading Italian firms in the cheese sector in 2008. We evaluate the effects of this event by using a difference-in-differences estimation strategy that compares the brands that were involved in the fraud with those that were uninvolved. It emerges that the negative news with regard to product quality induced consumers to shift their demand from involved to not involved brands. These effects persisted over time, even after the media stopped giving attention to the issue. Retailers suffered part of the costs of the bad news about product quality: the retail margin on brands that were mentioned adversely by the media decreased after the negative publicity.     

Incumbency advantages,distribution networks and exclusivity — Evidence from the European car markets

This paper investigates the role of distribution networks in explaining incumbency advantages in the European car market. We compare three approaches to incorporate the size of distribution networks in discrete choice models of product differentiation: as an extra product characteristic, as a new dimension of product differentiation in a nested logit framework, or as a measure of the expected travel cost under a spatial Poisson distribution of locations. We obtain robust conclusions across all three approaches: distribution networks play an important role in explaining car producers' market shares, but they only appear to explain part of the bias towards domestic brands in the car market. We also report on an ongoing research project where we analyze the role of distribution networks at a much more detailed local market level, and investigate the specific role of exclusive dealing as a possible entry barrier.     

How Do Interaction Activities among Customers and between Customers and Firms Influence Market Performance and Continuous Product Innovation? An Empirical Investigation of the Mobile Application Market

Mobile application markets (MAMs) significantly differ from other existing marketplaces at least in two aspects. First, customers (app users) and firms (app providers) frequently interact with each other in real time, which is not common in the conventional marketplaces. Second, many app providers incorporate customers’ opinions or suggestions into their software upgrades, representing one of the most unique and interesting aspects of MAMs. Therefore, it has become critical to understand the impact of interaction activities not only among customers, but also between customers and firms on the market performances of new products in MAMs. One of the most significant issues firms face is whether firms reflect on customers’ postpurchase interaction activities, and the next interesting question is how firms respond to them. This study explores the effects of customer‐to‐customer (C2C), customer‐to‐firm, and firm‐to‐customer interaction activities on market performance. In addition, this study investigates how communication activities influence a firm's tendency to pursue continuous product innovation through research and development (R&D). Using data obtained from a major MAM, T store, three models that are respectively related to product sales, product lifetime, and a firm's R&D activity for product upgrades, are applied to empirically test hypotheses concerning the effects of interaction activities. In our analyses of market performance, a hierarchical log regression model with 10,840 weekly transactions data set related to product sales (model A) and 291 aggregate transactions related to product lifetime (model B) is used. Results indicate that C2C and customer‐to‐firm communication activities have a positive impact on sales, but little relationship with product lifetime. However, a firm's continuous product R&D has a positive impact on both sales and lifetime performance. Our analysis of a firm's R&D (model C) shows that C2C and customer–firm communication increases a firm's R&D activity. Taken together, these results have important implications for customer–firm interactions, market performance, and R&D strategies.     

Can Tightness in the Housing Market Help Predict Subsequent Home Price Appreciation? Evidence from the United States and the Netherlands

This article assesses the predictive power of variables that measure market tightness, such as seller's bargaining power and sale probabilities, on future home prices. Theoretical insights from a stylized search‐and‐matching model illustrate that such indicators can be associated with subsequent home price appreciation. The empirical analysis employs listings data on residential units offered for sale through a real estate broker in the Netherlands and for certain U.S. regions. Individual records are used to construct quarterly home price indices, an index that measures seller's bargaining power and (quality‐adjusted) home sale probabilities. Using conventional time‐series models we show that current sale probabilities and bargaining power can significantly reduce home price appreciation forecast errors and help to predict turning points in local area housing markets. The measures and approaches in this article help to demonstrate ways in which researchers and practitioners can leverage listings data to gain knowledge about the current and future state of the housing market.     

Empirical Evidence on the Success of R&;D Cooperation—Happy Together?

In this paper we analyse the effect of past R&D cooperation on current firms’ innovation performance. Success measures are: sales of innovative products, distinguishing between products new to the firm and new to the market, and cost reductions due to innovative processes. Particular attention is paid to the impact of different cooperation partners. The analysis rests on firm-level data of the annual German innovation survey. We find that R&D cooperation with competitors leads to greater cost reductions that are attributable to innovative processes. R&D cooperation with research institutes has a positive influence on a firm’s economic success with market novelties.      

Do Recessions Transform Work and Employment? Evidence from Ireland

Two contrasting views tend to dominate the literature on the impact of recessions on employment. One view is that recessions amount to a ‘critical conjuncture’ for work and employment systems, a time when firms try to transform radically existing employment models. The alternative perspective is that firms, constrained mostly by the forces of path dependency, seek to adjust to the immediate or short‐term pressures of the recession but otherwise maintain the established way of organizing the employment relationship. The purpose of this article is to contribute to this literature by reporting the findings of a major study of the effects of the recession on work and employment in firms based in Ireland. The main finding to emerge from the study is that firms mostly have made improvised adaptations in response to the crisis and have shied away from far‐reaching transformational strategies.     

Scrapping subsidies during the financial crisis — Evidence from Europe

We study the effects of car scrapping subsidies in Europe during the financial crisis. We make use of a rich data set of all car models sold in eight European countries, observed at a monthly level during 1998–2011. We employ a difference-in-differences approach, exploiting the fact that different countries adopted their programs at different points in time. We find that the scrapping schemes played a strong role in stabilizing total car sales in 2009: they prevented a total car sales reduction of 30.5% in countries with schemes targeted to low emission vehicles, and a 29.0% sales reduction in countries with non-targeted schemes. We find evidence of crowding out due to substitution from non-eligible to eligible cars in France and Spain. Because eligible cars tend to be more fuel efficient, targeted scrapping schemes had significant environmental benefits in the form of improved fuel consumption: without the schemes, the average fuel consumption of new purchased cars would have been 3.6% higher. Those benefits did not materialize under non-targeted schemes, in which the fuel consumption would have been only 0.7% higher absent the scheme. Finally, we find some evidence that domestically produced cars benefited at the expense of foreign competitors especially in countries where the schemes were not targeted.     

Do External Knowledge Sourcing Modes Matter for Service Innovation? Empirical Evidence from South Korean Service Firms

To source external knowledge, firms in the service area use various sourcing modes simultaneously suitable for their internal needs or external environments. Each external knowledge sourcing mode has distinctive characteristics, and as such, they can offer different advantages and/or disadvantages to the firms. Thus, the effects of external knowledge sourcing on service innovation may vary depending on the sourcing modes. The current study aims to empirically examine the different effects of various external knowledge sourcing modes on service innovation. The study identifies three external knowledge sourcing modes: joint development, technology purchasing, and external information acquisition. Three hypotheses are established to examine the relationships between the extent of utilizing each mode and service innovation performance in terms of new service introduction. The data for analysis are selected from the “Korean Innovation Survey 2006: Service Sector” (KIS 2006). It is regarded as South Korea's version of the Community Innovation Survey (CIS). The KIS 2006 data set covers joint development, technology purchasing, and external information acquisition activities of corporations in the service sector in South Korea. The study empirically analyzes the data set using a negative binomial regression model. The results first demonstrate that the extent of the joint development has an inverted U‐shaped relationship with the service innovation performance. Second, the results indicate that, on the other hand, service innovation performance decreases with the increase to the extent of the technology purchasing when the extent is below the threshold. On the other hand, it increases with the increase to the extent of the technology purchasing; this occurs when the extent exceeds the threshold. Third, the results show that external information acquisition has a positive effect on service innovation performance. These findings support that the extent of utilizing each mode has different relationships with service innovation performance. The findings suggest that service firms need to utilize joint development at a moderate level, active technology purchasing, and as much external information acquisition as possible to maximize service innovation performance. In practice, this finding can help managers of service firms select appropriate external knowledge sourcing modes and determine the optimum level of use for each mode. This study also can help firms build up strategies for external knowledge sourcing.     

Why Do Established Firms Enter Some Industries and Exit Others? Empirical Evidence on Italian Business Groups

In this paper the determinants of entry and exitdecisions are analysed empirically on a sample of wellestablished business groups operating in Italianmanufacturing. The focus is on the role of sunk costsas entry barriers. Two competing hypotheses aretested. On the one hand, setup costs, R & D andadvertising outlays act as barriers to entry for bothnew and already established firms because of theirindustry-specific commitment value. On the other hand,they may induce established firms, which operate insimilar industries, to enter. This is the case if R & Dand advertising are firm-specific investments whichgenerate externalities to be efficiently exploited inadjacent industries. Overall results suggest that thesecond hypothesis gives a better picture of thebehaviour of our sample of firms.     

Workfare programs and children’s meals intake: Evidence from India

This paper examines the impact of the Indian workfare program (MGNREGA - Mahatma Gandhi National Rural Employment Guarantee Act) that promotes female participation, on the food consumption of children. Using nationally representative data from the National Sample Surveys between 1999–2007, and a difference-in-differences strategy stemming from the staggered roll-out of the program across districts of India, we find that MGNREGA resulted in a decrease in the number of meals for preschool and school-going children. The negative effects on the number of meals are partially attenuated in larger households.     

The Impact of an increasing share of RES-E on the Conventional Power Market — The Example of Germany

The intermittency of wind power has a decreasing effect on day-ahead spot prices. Data from Germany illustrate this effect and explain the underlying relationships. This short-term price effect leads to an adaptation process in the conventional generation capacity mix. In the long-run, a higher peak load plant share is required to cope with the increasing volatility of the residual demand. The result is an adapted merit-order. This merit-order intersects with an increasingly volatile residual demand curve and leads to a higher price volatility in the power market, which is going to trigger further adaptations. Therefore this article concludes with a list of open research questions, which can be derived from the illustrated relationship. These research questions should be investigated as soon as possible in order to induce the required adaptations in time.