What factors inspire the high entry flow in Taiwan's manufacturing industries–A count entry model approach

Why is the entry flow of the manufacturing sector extremely high in Taiwan, and does it contribute to the prevailing entrepreneurship? This article aims to explore what factors inspire potential entrants to go into an industry. Based on a theoretical formulation of the Poisson probability entry model, a count data model is employed to investigate the determinants of entry flows. The empirical results reveal that traditional entry barriers indeed lower the entry flow. The entry incentives, including price cost margin and industry growth, play a lesser role at attracting new firms, while alternatively the market size acts as a better proxy of an entry incentive in explaining entry flows. Incumbents’ responses to entry, R&;D and advertising intensity are found to be associated with a significant negative impact on entry flows. This article also finds that there is a higher bound of covariate of entry, about 10%, that can be attributed to the immeasurable personality of entrepreneurs–entrepreneurship.

Rather be the chicken's beak than be the cow's behind. 1 ¹?This proverb explains in terms the concept of choosing jobs as how one would like to be a leader of a small firm rather than an employee in a large enterprise.

The trade that might cause life hazard will be dealt, while the trade that might cause a loss will not be dealt.

Two traditional Chinese proverbs     

Homogeneity and heterogeneity in information technology private standard settings – the institutional account

The IT (information technology) standardisation landscape is characterised by the increasing importance of private standard setting consortia, a greater convergence between the structural features of formal and private standard organisations, and greater diversity in standard organisations. Institutional theory has been applied to explain the convergence of standard setting bodies. This paper applies institutional theory to four studies of standards organisations, showing that there are indeed homogenising mimetic, coercive and normative forces in standard setting that lead to the convergence of emergent organisations with the institutional features, but that there are also forces promoting heterogeneity, in particular the multiplicity of institutional fields within which standards consortia operate, leading to a complex, and often conflicting, matrix of institutional norms to be accommodated.     

Measuring agents’ reaction to private and public information in games with strategic complementarities

In games with strategic complementarities, public information about the state of the world has a larger impact on equilibrium actions than private information of the same precision, because public signals are more informative about the likely behavior of others. We present an experiment in which agents’ optimal actions are a weighted average of the fundamental state and their expectations of other agents’ actions. We measure the responses to public and private signals. We find that, on average, subjects put a larger weight on the public signal. In line with theoretical predictions, as the relative weight of the coordination component in a player’s utility increases, players put more weight on the public signal when making their choices. However, the weight is smaller than in equilibrium, which indicates that subjects underestimate the information contained in public signals about other players’ beliefs.     

Multiple steady states and indeterminacy in the Uzawa–Lucas model with educational externalities

This paper examines a foreign technology holder’s licensing choices between royalty and fixed-fee scheme. We emphasize that foreign licensor chooses the quality of licensed technology when the licensee country does not implement perfect intellectual property protection for licensor’s technology. We study quality choice as the foreign licensor’s selection for a particular grade of technical skills. We show that fixed fee emerges as the equilibrium licensing scheme when both the transfer of his technology is relatively efficient and the licensee is sufficiently cost competitive in the domestic market, and that royalty licensing prevails otherwise. We further show it need not hold the general belief that welfare in the licensor country unambiguously rise with a stronger patenting system in the licensee country when, in particular, such patenting system in place is sufficiently lax.     

Optimal taxation in the Uzawa–Lucas model with externality in human capital

In this paper we study the optimal policy in the Uzawa–Lucas model with externality in human capital when agents value both consumption and leisure. We find that the government pursuing the first best can achieve its goal by a subsidy which depends on foregone earnings while studying and which is financed through a lump sum tax. Anyway, the optimal policy, that should be designed to provide incentives for agents to devote more time to schooling and cut both on leisure and working, is not unique. There exists an infinite number of combinations of consumption, capital income, labor income and lump sum taxes that can decentralize the first best.     

Deterministic and stochastic trends in the Lee–Carter mortality model

The Lee and Carter (1992) model assumes that the deterministic and stochastic time series dynamics load with identical weights when describing the development of age-specific mortality rates. Effectively this means that the main characteristics of the model simplify to a random walk model with age-specific drift components. But restricting the adjustment mechanism of the stochastic and linear trend components to be identical may be too strong a simplification. In fact, the presence of a stochastic trend component may itself result from a bias induced by properly fitting the linear trend that characterizes mortality data. We find empirical evidence that this feature of the Lee–Carter model overly restricts the system dynamics and we suggest to separate the deterministic and stochastic time series components at the benefit of improved fit and forecasting performance. In fact, we find that the classical Lee–Carter model will otherwise overestimate the reduction of mortality for the younger age groups and will underestimate the reduction of mortality for the older age groups. In practice, our recommendation means that the Lee–Carter model instead of a one-factor model should be formulated as a two- (or several) factor model where one factor is deterministic and the other factors are stochastic. This feature generalizes to the range of models that extend the Lee–Carter model in various directions.     

Testing the Uzawa–Lucas model with OECD data

The paper tests the Uzawa–Lucas model of endogenous growth using a modified Granger-causality test and panel data for 20 OECD countries. The results favour the human capital augmented endogenous growth model against both the exogenous growth model à la Solow and endogenous growth models of the AK type.     

Testing the Bhaduri–Marglin model with OECD panel data

The Bhaduri–Marglin model is a post-Kaleckian model that allows one to study the impact of a functional income distribution on the growth in demand. Over recent years, a number of empirical studies based on this model have aimed at determining whether a redistribution towards profits harms or fosters demand growth. The focus so far has been on a very limited number of countries. This paper is the first to test the Bhaduri–Marglin model with panel data. It finds that demand growth is reduced by a redistribution towards profits in the average OECD country. Productivity growth is also impaired.     

Election systems,the “beauty premium” in politics,and the beauty of dissent

We ask three questions. First, do election systems differ in how they translate physical attractiveness of candidates into electoral success? Second, do political parties strategically exploit the “beauty premium” when deciding on which candidates to nominate, and, third, do elected MPs use their beauty premium to reap some independence from their party? Using the German election system that combines first-past-the-post election with party-list proportional representation, our results show that plurality elections provide more scope for translating physical attractiveness into electoral success than proportional representation. Whether political parties strategically use the beauty premium to optimize their electoral objectives is less clear. Physically attractive MPs, however, allow themselves to dissent more often, i.e. they vote more often against the party line than their less attractive peers.     

Macro-economic relativity: government spending,private investment and unemployment in the USA 1948–1998

This paper first explores how movements in Government spending and private capital investment can be related to changes in the unemployment rate of the USA between 1948 and 1988. The resulting model shows that there are very stable dynamic relationships between purely relative measures of these major macro-economic variables over this time; relationships that appear to continue into the post-1988 period and may help in understanding the differences in the investment–unemployment behaviour of the US economy before and after 1988.     

Saving the public from the private? Incentives and outcomes in dual practice

We consider a monopoly physician offering free public treatment and, if allowed, a private treatment for which patients have to pay out of pocket. While patients differ in the propensity to benefit from private treatment it always yields better health outcomes than public treatment but is also more costly in terms of money and time. We study the physician's supply of private care and allocation of time costs across public and private patients and contrast these with the first‐best allocation. To increase the willingness‐to‐pay for private treatment the physician shifts time costs to public patients. While this turns out to be socially optimal, the resulting positive network effect leads to an over‐provision of private care if time costs are sufficiently high. A second‐best allocation arises when the health authority sets public reimbursement but has no control over private provision. Depending on the welfare weight the health authority attaches to physician profits, a ban of dual practice may improve on the second‐best allocation. Notably, a ban benefits not only public patients but also private patients with a moderate propensity to benefit from private care.     

Existence of equilibrium in the Helpman–Krugman model of international trade with imperfect competition

Helpman and Krugman (Market structure and foreign trade. Increasing returns, imperfect competition, and the international economy. MIT Press, Cambridge, 1985) provide a synthesis of the traditional factor proportions theory of international trade and the theory of international trade due to the exploitation of scale economies in imperfectly competitive markets. They derive illuminating results about trade patterns and gains from trade, among other things, leaving unanswered the question of existence of equilibrium, however. The central significance of their characterization of properties of free trade equilibria with inter-industry and intra-industry trade calls for an analysis of existence of equilibrium. This is the object of the present paper. We prove the existence of equilibrium for the integrated multi-sector multi-factor Helpman–Krugman economy without national borders. Well-known conditions ensure that the world economy under free trade reproduces this equilibrium and thus establishes existence of a free trade equilibrium. Since an equilibrium of the integrated economy is not necessarily unique, the same holds true for a free trade equilibrium.     

Directional time-varying partial correlation with the Gaussian copula–DCC–GARCH model

This article suggests a directional time-varying partial correlation based on the dynamic conditional correlation (DCC) method. A recent study proposed the copula DCC based on the vine structure. Due to the arbitrary variable selection, their method can produce unnecessary dependence in the multivariate structure, with extra economic and computational burdens. To overcome this limitation, we incorporate directional dependence by copula to track the causal relationship among multiple variables and then extend the copula bivariate DCC method to a directional time varying partial correlation in the multivariate structure. Our proposed method provides a reasonable and efficient conditional dependence structure, without the trial and error process. We offer an application of our method to the U.S. stock market as an illustrated example.     

On locally optimal programs in the Robinson–Solow–Srinivasan model

In the context of a model due to Robinson, Solow and Srinivasan (the RSS model), we report results on the existence and characterization of locally optimal programs, a concept taken from theoretical physics. In particular, we propose a (new) transversality condition under which all locally optimal programs are good. An extended introduction places our theorems in the context of previous work on the existence question, including that on agreeable programs. It appears that there is no completely rational way to attack [the] problem without considering development programmes over an infinite horizon (Gale in Rev Econ Stud 34:1–8, 1967). The analysis of simple models is essential if we are to understand the corresponding situation for more complex models of the economy (Mirrlees and Stern in J Econ Theory 4:268–288, 1972). The technical convenience, for clear and quantitative results, of using an infinite time horizon is rather great (Hammond and Mirrlees in Models of economic growth, Wiley, New York, pp 283–299, 1973).     

Segregation and gender wage gaps in the private and the public sectors: an analysis of Danish linked employer–employee data, 2002–2012

This paper examines the relation between segregation and the gender wage gap in the public and the private sectors in Denmark from 2002 to 2012. The analysis shows that male–female differences in the share of females in occupations, industries, establishments and job cells (occupations within establishments) constitute 46 % of the raw gender wage gap in the private sector, while segregation in the public sector accounts for as much as 63 %. Segregation thus plays a substantially more important role in accounting for the gender wage gap in the public sector than in the private sector. While the importance of segregation for wage formation decreased substantially in the public sector over time, it only decreased slightly in the private sector. Although the remaining gender wage gap, after controlling for segregation, is close to zero in the public sector, a substantial within-job cell differential remains after controlling for segregation in the private sector.     

Ex post participation constraint in a principal–agent model with adverse selection and moral hazard

This paper analyzes optimal contracting when an agent has private information before contracting and exerts hidden effort that stochastically affects the output. Additionally, the contract is constrained to satisfy the agentʼs ex post participation. We highlight three features of this model. First, the agent faces countervailing incentives. Second, the separation of types is never optimal. Third, the optimal constant bonus rewarding success is distorted downward below its efficient level.     

Does asymmetric information affect the premium in mergers and acquisitions?

We test the influence of information asymmetry on the premium paid for an acquisition. We analyze mergers and acquisitions as English auctions. The theory of dynamic auctions with private and common value predicts that more informed bidders may pay a lower price. We test that prediction with a sample of 1,026 acquisitions in the United States between 1990 and 2007. We assume that blockholders of the target's shares are better informed than other bidders because they possess privileged information on the target. Our empirical results show that blockholders pay a much lower premium than do other buyers     

Optimal simple rules and the lower bound on the nominal interest rate in the Christiano–Eichenbaum–Evans model of the US business cycle

Schmitt-Grohé and Uribe (NBER wp 10724, 2004b) analyzes the optimal, simple and implementable monetary policy rules in a medium-scale macromodel, as the one proposed by Christiano et al. (J Polit Econ 113:1–45, 2005). In doing so, they use a sensible, but somewhat arbitrary constraint to account for the lower bound condition on the nominal interest rate. In this work, we check the robustness of their main results to such a criteria. We find that the optimal policies are actually absolutely robust to the easing of this criterion for all the different cases considered.

A Takayama–Judge activity model applied to the analysis of allocation and trade in Sweden

The purpose of this article is to formulate a numerical general equilibrium model of the Swedish economy, and to use the model for a quantitative evaluation of the pattern of comparative advantages. The model is essentially a Leontief type of input-output model, extended with linear demand functions for final commodities, foreign trade activities and capacity and resource constraints. Due to the linearity the model can easily be reformulated and solved as a quadratic programming model. The evaluation of the pattern of comparative advantages of the Swedish economy is carried out as an analysis of the choice between inport and domestic production in a temporary equilibrium framework with exogenously given world market prices, exports and domestic production capacities.