REGULATIONS AND STRATEGY: EVIDENCE ON ADVERTISING

This article evaluates the impact of the introduction of incentive regulation on firms’ advertising spending among the population of local exchange carriers in the United States telecommunications industry between 1988 and 2001. The results show that the hybrid rate of return method and other intermediate incentive schemes have a negative relationship with advertising spending. Conversely, the introduction of pure price caps schemes has had a positive and significant impact on firms’ advertising spending. These results highlight the importance of incentive compatible mechanism design in motivating firms to be market oriented and strive for superior performance.     

INCENTIVE COMPATIBLE MECHANISM DESIGN AND FIRM GROWTH: EXPERIENCES FROM TELECOMMUNICATIONS SECTOR REGULATION

ABSTRACT**: This article evaluates the impact of the introduction of incentive regulation on firm growth among the population of local exchange carriers in the US telecommunications industry between 1988 and 2001. The results show that the rate of return method and other intermediate incentive schemes have had a negative impact on firm growth. Conversely, the introduction of pure price caps schemes had a positive and significant impact on firms’ growth. These results highlight the importance of proper and appropriate incentive compatible mechanism design in motivating firms to strive for superior performance.     

Fiber in the backbone! The impact of broadband adoption on firm growth in network markets

This article examined the relationship between the adoption of technology, via the deployment of broadband, on revenue growth, which is an important measure of financial performance, of the deploying firms using panel data for all of the major local exchange carriers in the US telecommunications industry from 1988 to 2001. The sector is an important network market context where the implications of deployment have substantial salience. The results show a positive relationship between broadband deployment and carriers’ revenue growth. This result implies that encouraging the adoption and deployment of broadband technologies in addition to the benefits of the consumers and firms at the receiving end of the new technology create the potential for better financial performance for the deploying firms. These results also imply that steps that can be taken to provide incentives that will hasten the further deployment of broadband will result in gains in financial performance within the sector.     

Regulations and Technology Diffusion: Cross Subsidies and Digital Infrastructure Creation

Using contemporary historical data, the analysis has examined the impact of cross‐subsidization on technology diffusion within telecommunications networks for local exchange sector telecommunications firms in the United States for the years 1995 to 2000. Firms obtaining greater cross‐subsidies engage in greater technology diffusion via network modernization using digital technologies. Contingent on the institutional setting, cross subsidies have risen. These amounts have been put to relevant use in the diffusion of technology via deployment of digital infrastructure. The principles of subsidization are considered negatively as they have presumed anti‐competitive consequences. In technology diffusion they have played a positive role, as the evidence shows. From a radical subjectivist perspective, cross subsidies generate financial capital for firms, which permits them to deploy high quality technology investments such as broadband and these investments can be used for entrepreneurial experiments in providing several customer services.     

REGULATION AND JOB CREATION: AN ANALYSIS OF INSTITUTIONAL CHANGE AND ITS CONSEQUENCES

The study evaluates the impact of changes in price regulation, an important institutional feature of firms’ environments, on average human resource deployment levels among the United States local exchange telecommunications companies using contemporary historical data between 1988 and 2001. The data permit a natural experiment approach for the evaluation. Firms regulated via rate of return approaches have employed significantly less staff. These employment levels have been 15 percent lower than that of firms regulated via incentive regulation. The study is a direct test of a principal dynamic capabilities idea that firms reconfigure resources in the face of environmental changes to retain their competitive advantages. These results signify the importance of designing regulations possessing requisite incentive properties in enhancing firm level employment and support the key premises of the dynamic capabilities perspective.     

The Revealed Preference of Regulatory Menus: Evidence from the Pre‐Nationalisation British Gas Industry

Prior to nationalisation British gas undertakings were faced with a choice of three different regulatory schemes linking the price charged for gas with the amount of dividend that could be paid. The three schemes, the maximum price system, the sliding scale and the basic price system possessed varying incentive properties. This paper investigates, empirically, the characteristics of firms under each regime. The multinomial logit results suggest that larger firms with lower unit costs were more likely to opt for regulatory options with more powerful incentive mechanisms.     

Does the Effectiveness of Employment Incentive Programs Vary by Firm Size?

This article examines the impact of national employment incentive programs on employment growth of individual firms in the original fifteen member states of the European Union (EU-15). We investigate whether this impact differs among firms of different size classes, and whether the effectiveness of employment incentive programs depends on the business cycle. We find that expenditures on employment incentives have a positive impact on employment growth for firms of all sizes. However, this impact is significantly reduced for smaller firms, suggesting that employment incentive programs are less effective for small firms. We also find that the employment impact of incentive programs is stronger during recessionary periods, but only for firms without any employees (i.e., own-account workers).     

Horizontal Mergers Under Asymmetric Information About Synergies

This paper analyses a situation in which there are three quantity‐setting firms, two of which are considering whether or not to merge. When these two firms have private information about the potential cost‐saving synergies of the merger, they may have an incentive to overstate them. This is because if they succeed in making the non‐merging rival firm believe that the synergies are high, the rival firm reduces output and the merger becomes more profitable. Under some conditions, anticipating that the rival will form such a belief, low‐synergy firms that would never merge under complete information will mimic high‐synergy firms by merging. Such pooling behaviour by the merging firms can have a negative impact on social welfare.     

National champions and globalization

Abstract .  In this paper, we offer an explanation why globalization (falling trade costs) may increase the government incentive to block foreign takeover of domestic firms and increase its incentive to allow mergers among national firms. This creation of 'national champions' occurs not only because the government may have a bias against foreign takeover, but also because consumer welfare gains associated with foreign acquisitions decrease with globalization. Endogenizing the government bias through lobbying efforts of the domestic firms, the paper shows that the bias does not need to be very strong before the government promotes domestic champions provided that barriers to trade are low.     

Incentive Regulation and Telecommunications Service Quality

We examine the impact of incentive regulation—price regulation and earnings sharing regulation—on retail service quality in the U.S. telecommunications industry between 1991 and 2002. We find that incentive regulation is associated with significantly higher service quality on several dimensions (e.g., more rapid installation of new telephone service, fewer trouble reports, and increased customer satisfaction) but significantly lower quality on some dimensions (fewer installation commitments met and longer delays in resolving reported service problems)JEL Classification: L51, L96, L15We thank Michael Crew and two anonymous referees for helpful comments and suggestions. We are also grateful to Vanessa Cruz and Mircea Marcu for excellent research assistance.     

Demand,innovation, and the dynamics of market structure: The role of experimental users and diverse preferences

The history of a number of industries is marked by a succession of eras, associated with different dominant technologies. Within any era, industry concentration tends to grow. Particular eras are broken by the introduction of a new technology which, while initially inferior to the established one in the prominent uses, has the potential to become competitive. In many case new entrants survive and grow, and the large established firms do not make the transition. In other cases, the established firms are able to switch over effectively, and compete in the new era. This paper explores a model which generates this pattern and has focused on the characteristics of the demand. We argue that the ability of the new firms exploring the new technology to survive long enough to get that technology effectively launched depends on the existence of fringe markets which the old technology does not serve well, or experimental users, or both. Established firms initially have little incentive to adopt the new technology, which initially is inferior to the technology they have mastered. New firms generally cannot survive in head-to-head conflict with established firms on the market well served by the latter. The new firms need to find a market that keeps them alive long enough so that they can develop the new technology to a point where it is competitive on the main market. Niche markets, or experimental users, can provide that space.

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Franco MalerbaEmail:

     

Regulation,Local Monopolies and Spatial Competition

Many regulated industries involve an oligopoly market structure. We examine optimal incentive regulation for a duopoly model of spatial competition when firms have private cost information. Market structure is endogenous as regulation determines market segments for firms and output distribution across consumers in each firm's market. By varying the assignment of consumers to firms, a relatively more efficient firm can be rewarded with a larger market, thus reducing quantity incentive distortions. We derive the optimal policy, assess the impact of asymmetric information relative to full information, and examine extensions to allow for ex ante asymmetries in firm structure.     

Technology transfer with commitment

Summary. This paper considers technology transfer in a duopoly where the firms have two types of commitment strategies: incentive delegation and capacity installation. It turns out that the possibility of technology transfer significantly differs under these two types of commitment as well as depending on whether one or both firms commit. Under strategic incentive delegation, the possibility of technology transfer is minimal when both firms use the incentive delegation strategy and the costs of incentive delegation are negligible. If both firms choose the incentive delegation strategy and the costs of incentive delegation are significant then the possibility of technology transfer rises compared to a situation with no pre-commitment. In case of commitment to a capacity level before production, the possibility of technology transfer does not change when both firms simultaneously commit to their capacity levels. Different sets of results arise when only one firm can pre-commit. Received: February 10, 1997; revised version: December 16, 1999     

The impact of bargaining on markets with price takers: Too many bargainers spoil the broth

In this paper we study how bargainers impact on markets in which firms set a list price to sell to those consumers who take prices as given. The list price acts as an outside option for the bargainers, so the higher the list price, the more the firms can extract from bargainers. We find that an increase in the proportion of consumers seeking to bargain can lower consumer surplus overall, even though new bargainers receive a lower price. The reason is that the list price for those who do not bargain and the bargained prices for those who were already bargaining rise: sellers have a greater incentive to make the bargainers’ outside option less attractive, reducing the incentive to compete for price takers. Competition Authority exhortations to bargain can therefore be misplaced. We also consider the implications for optimal seller bargaining.     

规制经济学理论研究综述

本文详细介绍了规制经济理论发展、演化的脉络。对传统的规制公共利益理论、规制俘虏理论、规制经济理论及其主要代表人物的观点予以评述 ;重点介绍了信息不对称和目标不一致情况下的激励规制理论及其经典模型。     

人工智能技术对审计质量的影响——基于会计师事务所视角的实证研究

随着人工智能时代的到来,人工智能技术正在逐步实现对人类活动的高度模仿,且能够比人类更快、更准确的完成重复性的工作,在审计工作中引入人工智能技术,能够将审计工作嵌入到自动化系统中,改变传统审计工作模式,达到提高审计质量的目的。本文以2016-2018年我国A股上市公司的数据为基础构建模型分析和验证人工智能技术对审计质量的影响。得出研究结论：人工智能技术对提升审计质量有促进作用,且对国内本土事务所审计质量提升效果明显高于国际四大事务所。     

基于委托-代理的排污定价机制研究

针对传统排污收费中没有对排污总量实施控制和对排污企业缺乏足够的治污激励,本文运用委托—代理理论和激励性规制理论,设计了一套排污定价机制。该机制从控制行业排污总量出发,通过对高污染企业实施惩罚,对低污染企业实施奖励,从而激励企业努力控制排污总量。该机制的实施,有助于高污染企业向低污染企业转移,但行业总产量仍能基本保持不变。     

科技创新补贴供给侧改革与企业研发策略研究*

本文利用2010—2015年沪深A 股上市公司的科技创新补助与R&D研发数据，分析了中国供给侧改革中创新驱动政策对企业创新行为与策略选择的引导激励效果。研究发现：随着创新驱动供给侧改革的实施，企业进行R&D研发投入的意愿得到加强，开始偏好长期研发投入。创新补贴认定与考核标准相关政策机制落地，地方政府的无效创新补贴激励机制被抑制。在供给侧改革下，企业对创新长期驱动与短期经济效益进行理性权衡抉择，减少了外观设计专利等策略性创新成果的产出。本文进一步通过对产权性质分组还发现：供给侧改革后，国有企业创新产出激励最为突出，大幅度增加了专利的申请。而民营企业则通过扩大长期研发项目的投入和聘用储备技术人员，为下一阶段的创新研发作铺垫。       

Tradeable permits,missing markets,and technology

This paper examines the effects of missing markets, heterogeneous pollutants, and the pollution technology of firms on the efficacy of transferable pollution permits. Under the assumption of perfect competition in all markets, we show that if firms can substitute among pollutants, then setting the optimal number of permits for only one pollutant will not, in general, lead to an efficient outcome. The degree of the inefficiency will depend on the information set available to the regulator and the substitutability among pollutants by firms. When establishing transferable pollution rights regulators should, therefore, consider the technology of firms. If firms discharge pollutants in the same fixed proportions, then the regulator need only set a market for one of the pollutants to ensure an efficient outcome. Where firms can substitute among pollutants, however, establishing a market for only one pollutant provides an incentive for firms to substitute to unregulated ones. This is an important policy issue as substitutability among pollutants within and across production processes may dampen the dynamic advantages of a tradeable permit policy.     

TRIPs and patenting activity: Evidence from the Indian pharmaceutical industry

This paper studies the impact of the strict patent regime on the patenting activity of Indian pharmaceutical firms and finds that patenting activity of these firms has increased after the signing of TRIPs. The study is conducted for 65 pharmaceutical firms for the period 1991 to 2004 using different parametric and semiparametric count panel data models. Results across different count data models indicate a positive and significant impact of the introduction of stronger patents on patenting activity. Further, the results show a gestation lag of 2 years between R&D spending and patent applications.