Who Invented the Lerner Index? Luigi Amoroso, the Dominant Firm Model, and the Measurement of Market Power

The invention of the price/cost margin (P-MC)/P as an index of market power is usually credited to Lerner (Rev Econ Stud 1(3):157?C175, 1934). Landes and Posner (Harv Law Rev 94(5):937?C996, 1981) is similarly often considered the main reference for the generalized version of the index in the case of a dominant firm that shares the market with price-taking rivals. From the viewpoint of the history of industrial economics both claims are incorrect. It was not Lerner who invented the price/cost margin index and the generalized version was fully derived before WWII. In both cases, priority should be given to Luigi Amoroso, the leading Italian mathematical economist in the interwar decades. In the latter case the names of Heinrich von Stackelberg and George Stigler also deserve credit.     

Perspectives of authenticity: implementation in technology education

To meet the intentions of the New Zealand Curriculum 2007 teachers must critically reflect on their role and their idea of what defines ‘best practice’ for teaching and learning in the twenty-first century. The teacher’s role has changed considerably over time. There is now, more than ever, a need for much greater transparency, accountability and collaborative practice within education. Famous philosophers and theorists including Plato, Rousseau and Dewey have expounded ideals of authenticity and authentic engagement, but it is only with the spread of constructivism that authenticity has gained more favour. The authors will investigate perspectives of authenticity, authentic learning, and authentic activities (Kreber et al. in Adult Educ Q Am Assoc Adult Contin Educ 58(1):22–43, 2007; Newmann in Authentic achievement: restructuring schools for intellectual quality, Jossey-Bass Publishers, San Fransisco, 1996; Newmann and Wehlage in Educ Leadersh 50(7):8–12, 1993; Reeves et al. in Quality conversations. Paper presented at the 25th HERDSA annual conference, 2002; Splitter in Stud Philos Educ 28(2):135–151, 2008). Through qualitative investigation they identify and summarise key viewpoints and demonstrate how these can be successfully implemented through programmes of technology education. A model of authentic technology for producing quality technological outcomes is presented. The authors show how an activity from an initial teacher education course in technology education uses identified aspects of authentic technological practice through the various dimensions of authenticity to develop enduring learning for students. They consider the role of context in developing learning and introduce some new ideas on successful student engagement in the field of conation (Riggs and Gholar in Strategies that promote student engagement, Corwin Press, California, 2009). Conation is defined as the will, drive and effort behind students’ engagement in learning and is increasingly seen as an integral part of authentic education.     

Countervailing Power and Chain Stores

The countervailing power of large buyers subdues the market power of sellers, but price concessions won by large buyers in upstream markets may or may not translate into lower prices downstream as Galbraith (American capitalism: The concept of countervailing power. Houghton Mifflin, Boston, 1952, Am Econ Rev 44:1–6, 1954) once contended. This paper presents a model that formalizes certain previously neglected elements of Galbraith’s argument, and shows that upstream price concessions may lead to lower downstream prices. In this model, a large retail chain store with countervailing power plays one large supplier off against another to win lower prices. An indirect effect of these interactions is that small retailers also pay lower prices, although not as low as the chain. Finally, competition among the retailers drives retail prices lower. The retail-price-restraining effect of the chain is stronger than the effect that is produced by the entry of an additional supplier.     

Access Pricing and Network Expansion in Natural Gas Markets

In this paper, we discuss different indirect approaches to cope with local market power in natural gas markets, in particular the extension of pipeline capacity as an instrument to combat nodal market power. One perspective, as expressed in Cremer and Laffont (Eur. Econ. Rev. 46:928–935, 2002) is that a discriminatory access price can correct for market failure and induce an increase in output. We argue, on the contrary, that the opposite holds: non-discriminatory access to the pipeline system will lead to overcapacity, and is thus the preferable strategy.     

The Impact of Timing on Bidding Behavior in Procurement Auctions of Contracts with Private Costs

We provide a comparison of bidding behavior between multi-round and single-round auctions considering bid lettings for asphalt construction contracts that are known to have primarily private costs. Using a reduced-form difference-in-difference approach as well as the nonparametric estimation technique that was proposed by Racine and Li (J Econom 119(1):99–130, 2004) we find that bidding is more aggressive in a sequential multi-round setting than in a simultaneous single-round format. We explore potential causes for the bidding difference across formats that are related to synergies and the level of bidder participation.     

Marktwirtschaftliche Energiewende: Ein Wettbewerbsrahmen für die Stromversorgung mit alternativen Technologien

If the German energy transition is to succeed, environmental soundness should not be the only criterion on the agenda with respect to the restructuring of the energy system. It is rather the security of electricity supply and likewise the social sustainability during the transformation process that has to be ensured. The primary question is how to fulfill this challenge in the light of the legal obligation of a complete nuclear power phase-out in the most cost-effective way. The looming avalanche of costs triggered by record-breaking highs of the expanding solar power systems, promoted under the German Renewable Energy Sources Act (EEG), should have made it clear that cost efficiency has only played a minor role so far. According to this study, (real) additional costs for all solar power systems, which had been installed between 2000 and the end of 2011 in Germany, sum up to about 100 billion Euros (prices as of 2011). Since these resources are withdrawn from other societal uses, it is essential that costs for the energy transition in general and in particular the consumers’ costs due to an increased share in renewable energies have to be minimized. For this reason, a new, more cost-efficient and market-oriented promotion/funding system is needed to replace the current system based on the EEG. As suggested by the Monopoly Commission (Monopolkommission 2011), the German Council of Economic Experts (SVR 2011) and recently by acatech, Germany’s National Academy of Science and Engineering (acatech 2012), a market-based promotion system with quantity control in the form of quotas for “green” energy would be a more efficient system. If from 2013 onwards, the future expansion of renewable energies would be fostered by a national quota-based system instead of the EEG, the expansion could be more cost-effective, according to calculations of this study. If, for example, the future price for green electricity certificates exclusively accelerated the expansion of on-shore wind power, the overall subsidies for those wind power capacities that may be installed between 2013 and 2020 merely amount to EUR 6.8 billion (current prices) instead of subsidies in the amount of nearly 58.8 billion Euro (current prices) in the case of further sticking to the EEG. This alone should give sufficient reason to replace the EEG as quickly as possible by a market-based support system such as the quota system.     

Teaching the nature of technology: determining and supporting student learning of the philosophy of technology

This paper reports on findings related to the Nature of Technology from Stage Two of the Technological Knowledge and Nature of Technology: Implications for teaching and learning (TKNoT: Imps) research project undertaken in 2009. A key focus in Stage Two was the trialing of different teaching strategies to determine how learning related to the components Characteristics of Technology (CoT) and Characteristics of Technological Outcomes (COTO) could be supported. These components fall within the Nature of Technology (NoT) strand of technology in the New Zealand Curriculum (NZC) (Ministry of Education, 2007) and as such, reflect a philosophical understanding of technology as a discipline. During this stage of the research further exploration was undertaken to determine how student understanding of these two components of technology education progressed from level 1 to level 8 of the NZC (Ministry of Education, 2007). Common misconceptions and partial understandings related to these components are identified and explained and four case studies are presented to illustrate strategies employed by teachers and their impact on student learning related to these two components. The Stage Two outcomes resulted in the revision of the Indicators of Progression for CoT and CoTO in order to clarify the progression expected of students in each component and provide increased teacher guidance to support such progression.     

Teaching Technological Knowledge: determining and supporting student learning of technological concepts

This paper reports on findings related to Technological Knowledge from Stage Two of the Technological Knowledge and Nature of Technology: Implications for teaching and learning (TKNoT: Imps) research project undertaken in 2009. A key focus in Stage Two was the trialing of different teaching strategies to determine how learning related to the components Technological Modelling (TM), Technological Products (TP) and Technological Systems (TS) could be supported. These components fall within the Technological Knowledge (TK) strand of technology in the New Zealand Curriculum (NZC) (Ministry of Education, 2007) and as such, reflect the key generic concepts or ‘big ideas’ of technology. During this stage of the research further exploration was also undertaken to determine how student understanding of these three components of technology education progressed from level 1 to 8 of the NZC (Ministry of Education, 2007). This resulted in a significant review of the Indicators of Progression for TM, TP and TS, providing clarification of the nature of the progression expected of students in each component as well as increased teacher guidance to support such progression. Common misconceptions, partial understandings and alternative concepts related to these components were confirmed and explained and five case studies were developed to illustrate strategies employed by teachers and their impact on student learning related to these three components.     

Why do venture capital firms exist: An institution-based rent-seeking perspective and Chinese evidence

This paper is a theory development to Amit, Brander, and Zott (1998, Journal of Business Venturing, 13: 441-466) on the nature of venture capital firms. In their paper, the authors argue that venture capital firms exist because they fill a market niche by developing the ability to overcome extreme information asymmetry embedded in high-risk entrepreneurial firms. However, this theory encounters difficulties in explaining a variety of organizational and behavioral divides among venture capitalists in different contexts and over time. In this paper, we apply the institution-based view to reveal the nature of venture capital. We argue that it is the venture capitalists’ capability to capture economic rents from the institutional environment that distinguish them from other financial intermediaries. We show the connection of our perspective with the conventional view as well as the usefulness of this theory in explaining the development of the venture capital industry in China.     

Edgeworth Price Cycles in Gasoline: Evidence from the United States

Studies of gasoline prices in multiple countries have found sequences of a sharp price increase followed by gradual decreases. This pattern is linked to Maskin and Tirole (Econometrica 56:571–599, 1988) duopoly pricing game and labeled Edgeworth price cycles. We examine data on average daily MSA-level retail gasoline prices for 350 MSAs in the US from 1996–2010. We confirm the finding of others and show that a relatively small number of US MSAs in contiguous upper Midwestern states evidence price cycling. However, our lengthy data set allows us to see that these MSAs began cycling in 2000. Thus, we can examine prices in cycling and non-cycling MSAs before and after cycling and find that prices are lower in MSAs that began cycling.     

Challenges for Empirical Research on RPM

This article discusses the empirical challenges that researchers face when demonstrating the existence and effects of resale price maintenance (RPM). We outline three approaches for finding price effects of RPM and the corresponding hurdles in data and methodology. We show that the quantity test that was suggested by Posner (Univ Chic Law Rev 45(1):1–20, 1977; Univ Chic Law Rev 48:6–26, 1981) does not identify the change to welfare when demand-enhancing effects are considered generally. Finally, we present some solutions to the challenge of identifying welfare effects, and we suggest guidelines for future research.     

Representations of technology in the “Technical Stories” for children of Otto Witt, early 20th century Swedish technology educator

Children’s fiction in school libraries have played and still play a role in mediating representations of technology and attitudes towards technology to schoolchildren. In early 20th century Sweden, elementary education, including textbooks and literature that were used in teaching, accounted for the main mediation of technological knowledge to schoolchildren. An investigation of children’s literature for schools is therefore important in order to understand what was considered worth knowing about technology at the time. The aim of this article is therefore to analyse the representations of technology and attitudes towards technology that were mediated through two children’s fiction books in Swedish elementary school libraries in the 1910s. We have limited the analysis of empirical material to the books Technical Stories for Young and Old (Tekniska sagor för stora och små, 1914) and Technical Stories of the War for Young and Old (Krigets tekniska sagor för stora och små, 1915) by the Swedish inventor, author and technology educator Otto Witt. Gauging Witt’s influence on the schoolchildren and educators of his time is very difficult, but in this first English-language article on his “technical stories” one can conclude that he was in many ways unique and probably fairly well-read in the schools of early 20th century Sweden and onward. He was also a particularly perceptive forerunner of today’s technology and science educators in his use of anthropomorphism as an educational tool.     

MICROCOMPUTER SOFTWARE COSTING LESS THAN $1000 FOR ECONOMIC AND MULTI-ATTRIBUTE DECISION ANALYSIS∗

Commodity price simulation is useful in many engineering economics applications, yet discrete approximations of the continuous stochastic processes used in modeling commodity prices are not always straightforward. This article describes the exact solution for discretely simulating the Schwartz and Smith (2000 Schwartz, E. and Smith, J. E. 2000. Short-term variations and long-term dynamics in commodity prices. Management Science, 46(7): 893–911. [Crossref], [Web of Science ®] , [Google Scholar]) two-factor model of commodity prices.     

The road less travelled: a pre-service approach towards the technology teaching profession

This paper presents the findings of a longitudinal study on the effectiveness of an innovative one-year pre-service Graduate Diploma of Teaching (secondary) for teachers of Technology. The timing of this study is significant. Over a decade of review and adjustment to the Technology curriculum, leading to the new learning area of Technology in the New Zealand curriculum, Ministry of Education (2007), has caused many teachers in New Zealand schools to retrench to an earlier approach or make their own interpretation of curricular requirements. This situation in schools created the need for those involved with pre-service teacher education to prepare programmes that signpost pitfalls while building on students’ own strengths and those of the curriculum to cope with the wide variety of interpretation and pedagogical approach of school communities. This paper suggests a way forward.     

Factors influencing student success on open-ended design problems

Open-ended design problems have become an important component in our educational landscape (Grubbs and Strimel in J STEM Teach Educ 50(1):77–90, 2015; Jonassen et al. in J Eng Educ 95:139–151, 2006; National Research Council in Education for life and work: developing transferable knowledge and skills in the 21st Century, National Academies Press, Washington, 2012; Strimel in Technol Eng Teach 73(7):8–18, 2014a). The ability of students to confront open-ended problem scenarios, think creatively, and produce novel designs have all been lauded as necessary skills for today’s twenty first century learners (Partnership for 21st Century Skills in P21 framework definitions, Author, Washington, 2016). This emphasis on open-ended design problems in problem-based learning scenarios has been tied to workforce and higher education preparation for students (National Academy of Engineering and National Research Council in STEM integration in K–12 education: status, prospects, and an agenda for research, National Academies Press, Washington, 2014; National Research Council in Engineering in K–12 education: understanding the status and improving the prospects, National Academies Press, Washington, 2009; Strimel in Technol Eng Teach 73(5):16–24, 2014b). However, little research has been conducted to identify the impact of potentially-influential factors on student success in such open-ended design scenarios. Therefore, the researchers examined data from 706 middle school students, working in small groups, as they completed an open-ended design challenge to determine the relationships between a variety of potentially-influential factors and student performance, as measured through adaptive comparative judgment. The analysis of the data revealed several relationships, significant and not significant, between identified variables and student success on open-ended design challenges.     

A review of: “ENGINEERING ECONOMY, 4th. Ed.” By E. Paul DeGarmo The Macmillan Company 1967 532 pp. $10.95.

A risk measure, expected opportunity loss (EOL), is introduced to quantify the potential loss of making an incorrect choice in risk-based decision making. Different from Savage's (1951 Savage, L. J. 1951. The theory of statistical decision. Journal of the American Statistical Association, 46(253): 55–67. [Taylor &; Francis Online], [Web of Science ®] , [Google Scholar]) minimax regret principle, EOL can account for the unbounded continuous random outcomes of alternatives and decision makers’ acceptable risk. This article studies the effects of the forms of loss function, correlation among outcomes, and the acceptable risk on the ranking results by considering the loss function in the power form. The results show that the loss functions and the outcomes correlations can significantly influence the rankings of alternatives in risk-based decision making.     

State of Play: How Do College Football Programs Compete for Student Athletes?

Each year high school football players sign letters of intent with college football programs. The NCAA governs this matching market with strict rules that are designed to protect amateurism. DuMond et al. (J Sports Econ 9(1):67–87, 2008) develop a model of athlete choice. I consider the matching puzzle from the program’s perspective: What factors increase the likelihood that a school will successfully recruit an athlete? Like DuMond et al., I find that the state of play matters. However, my results suggest that football programs are willing to recruit outside their borders. In addition, the results align with prior findings about cheating in the NCAA. This extends the literature on college sport recruiting and may provide insight into other matching puzzles in academic, medical, and business job markets.     

A review of: “APPLIED ECONOMIC ANALYSIS FOR TECHNOLOGISTS,ENGINEERS, AND MANAGERS ” BY MICHAEL S. BOWMAN Prentice-Hall,Inc., Upper Saddle River,New Jersey, 1999, xii + 561 pp., ISBN: 0-13-375932-6, List: $76.75.

In their recent paper Tang and Tang (2003 Tang, S. L. and Tang, H. J. 2003. The variable financial indicator IRR and the constant economic indicator NPV.. The Engineering Economist, Vol. 48(No. 1): pp. 69–78. [Taylor &; Francis Online] , [Google Scholar], pp. 69–78) revive a longstanding controversy—net present value (NPV) versus internal rate of return (IRR)—by characterizing the NPV as an economic indicator and the IRR as a financial one. The paper implies that this distinction justifies ranking financial alternatives by ranking their IRRs. In the current article, it is argued that the direct IRR ranking does not necessarily provide the same evaluation environment—and therefore a fair comparison—for each alternative involved, and that the incremental ranking approach is needed to remedy this shortcoming. The article also points out that Tang and Tang's numerical examples of simple projects with one sign change in their cash flow patterns do not address the problem of multiple IRRs, which consequently renders Tang and Tang's ranking approach dysfunctional. It is demonstrated that the concept of a true rate of return, substituting for the non-performing IRR and applied in conjunction with the incremental approach, provides an adequate tool for ranking mutually exclusive projects or a project's technical or financial alternatives.     

Double vision: Insights about the origin and interpretation of multiple IRRs

The ability of a project's internal rate of return (IRR) to quantify its economic return has been questioned by many scholars over the past 60 years, most recently by Magni (2010 Magni, C.A. (2010) Average internal rate of return and investment decisions: a new perspective. The Engineering Economist, 55(2), 150–180. [Google Scholar], 2013 Magni, C.A. (2013) The internal rate of return approach and the AIRR paradigm: a refutation and a corroboration. The Engineering Economist, 58(2), 73–111. [Google Scholar]). Although IRR is a plausible—albeit imperfect—measure of a project's economic return when the cash flow stream is conventional, IRR can be an untenable measure of an unconventional project's economic return. The goal of this article is to identify a simple, intuitive explanation of IRR, one that can be applied to any cash flow pattern. To do this, the article shows how a project's IRR systematically changes when it first crosses from the conventional into the unconventional realm (i.e., a small cash outflow is appended to a conventional cash flow stream) and then as it becomes progressively more unconventional. This process reveals that the most robust economic interpretation of IRR—for both conventional and unconventional projects—is that a project's IRRs are external benchmarks that divide the set of all plausible discount rates into positive and negative net present value (NPV) ranges, rather than internally generated returns. Because it can be difficult to estimate a project's cost of capital with precision, this information can help guide the sensitivity analysis of a project.