Too many options? Theory and evidence on option exchange design

A model of option exchange design is proposed and tested. The model allows investors to choose among several exchange‐traded options based on a trade‐off between standardization costs and liquidity/transaction costs. It employs a spatial economics approach to provide results for the existence of markets for particular option contracts on the exchange, a comparison of exchange design by a social planner and a profit‐maximizing monopolist (corresponding to the idea that most derivatives exchanges centralize the design and creation of option contracts), and comparative statics that can potentially aid decision makers in the design of option exchanges. In the empirical work, open interest is analyzed for Chicago Board Options Exchange (CBOE) options on the stocks in the S&P 100 index. In accordance with the model's predictions, open interest forms a previously undocumented seesaw pattern across strike prices, clustering around certain strike prices, and dropping off for the adjacent strike prices. © 2006 Wiley Periodicals, Inc. Jrl Fut Mark 26:533–570, 2006     

Japan's Negative Risk Premium in Interest Rates: The Liquidity Trap and the Fall in Bank Lending

Japan's interest rates have been compressed toward zero because of pressure coming through the foreign exchanges. Twenty years of current‐account surpluses have led to a huge buildup of claims – mainly dollars – on foreigners. Because of ongoing fluctuations in the yen/dollar exchange rate, Japanese financial institutions will only willingly hold these dollar claims if the nominal yield on them is substantially higher than on yen assets. In the 1990s to 2002 as US interest rates have come down, portfolio equilibrium has been sustained only when nominal interest rates on yen assets have been forced toward zero. One consequence is the now infamous liquidity trap for Japanese monetary policy. A second consequence is the erosion of the normal profit margins of Japan's commercial banks, leading to a slump in new bank credit and an inability to grow out of the overhang of old bad loans.     

Transitory real‐time property rights and exchange intellectual property

American exchanges own the price quotations they generate. Access to real‐time price information is highly valued by most market participants. This enables exchanges to exact royalties from the sale of such market information. In this sense, an exchange's ownership of its price quotations is akin to owning a property right in a perishable commodity (i.e., fresh market price quotations) that is most valuable for only a transitory or limited period of time. The implications of exchange ownership of price data extend beyond financial markets. Recently, Woodard (2000) has noted that some internet auction operators have asserted ownership over the prices they generate. This study reviews the legal origin and nature of the property right to price quotations generated on U.S. futures exchanges and assesses whether exchange ownership should be transitory. The legal basis for transitory real‐time (real and personal) property rights is discussed and the economic implications are considered. © 2003 Wiley Periodicals, Inc. Jrl Fut Mark 23:891–913, 2003     

The Training of Jobseekers by Non‐profit Organizations: An Analysis Based on Data from the Upper Normandy Region of France

There is now an extensive academic literature on non‐profit organizations (NPOs). The hypothesis that these organizations are different from for‐profit organizations (FPOs) is one that is frequently adopted. Nevertheless, a number of recent studies have suggested that many factors may cause NPOs to lose their specificity. The aim of this paper is to assess the influence of these variables empirically with regard to the continuing training sector. Our results lead us to conclude that, while some of these variables do indeed have an impact on the behavior of NPOs, there is sufficient evidence to conclude that they do behave differently from FPOs.     

Assessing shared understanding of economic exchange among children and adults

Research into children's understanding of economic exchanges has been conducted within two major purviews. Psychologists and sociologists have examined children's understanding via age‐related developmental theories, and economists have focused upon measures of economic literacy. Anthropologists and sociologists have included noneconomic factors in examining the economic‐exchange practices of adults, but the role of such social or moral influences has not been examined within the context of children as consumers. With the use of this research foundation, the current research is one of the first reported attempts to include children and adults in the same study to determine if there is a shared understanding of economic exchanges. As such, the role of noneconomic factors as a part of the everyday economic‐exchange behavior of children was also examined. Study findings suggest that past research has underestimated children's understanding of the economic world, as the current research found that children, ages 7–12 years, exhibited many of the same facets of intuitive economic understanding as adults from their own community group. The findings also suggested that the influence of noneconomic variables becomes greater as children grow into adulthood. © 2005 Wiley Periodicals, Inc.     

Interorganizational Favour Exchange and the Relationship Between Doing Well and Doing Good

This article examines whether ethical business practice enhances financial performance with respect to interorganizational favour exchange. We argue that the link between the ethicality and economic utility of interorganizational favour exchange is governed by: (1) organizational–individual interest alignment/conflict and (2) the fairness or justifiability of favour exchanges from the perspective of third parties. We classify interorganizational (IO) favour exchange into four types (Business–Personal, Personal–Business, Personal–Personal and Business–Business favour exchange). Our analysis shows that the first three types of favour exchange are unethical as they involve conflicts between organizational and individual interests in one or both participating organizations that negatively affect organizational value creation. The last type of favour exchange involves organizational–individual interest alignment in both participating organizations and positively affects the capacity of those involved in the exchange to create value. Favour exchanges of this fourth variety are ethically justifiable unless they unfairly damage the legitimate interests of third parties. In the latter case, these favour exchanges create the risk of negative third party reactions, which in turn affect the sustainability of the benefits of the favour exchanges to the focal group (the dyad). Our research results advance understanding of the ethical and economic implications of IO favour exchange, counter the prejudice against this behaviour in organizations, provide ethical guidance for management and business practice, and have implications for the relationship between doing well and doing good.     

A Social Exchange Perspective on Business Ethics: An Application to Knowledge Exchange

An extensive body of literature in sociology and anthropology has shown that different societies have developed different structures for exchange of items such as goods, status and information. The purpose of this paper is to demonstrate how social exchange theory can help illuminate many of the underlying bases of different ethical perspectives in debates about social exchanges. Social exchange theory is applied to three common types of knowledge exchange – R&D joint ventures, commercial intellectual property exchange and academic exchange. Two key factors that underlie different ethical perspectives are shown to be differences in structures for social exchange and differences in views of the alienability of knowledge from its originator.     

THE WAGE–WAGE‐ . . . ‐WAGE–PROFIT RELATION IN A MULTISECTOR BARGAINING ECONOMY

The equalization of profit rates across industries subject to firm‐level bargaining over wages generates an interindustry wage structure with higher wages in capital‐intensive sectors. The familiar inverse wage–profit relation gives way to a wage–wage‐ . . . ‐wage–profit surface on which the profit rate can vary directly with the wage paid in an individual industry. Institutional changes that decrease workers' bargaining power and increase the incomes of the unemployed tend to compress the wage distribution; these changes draw political support from cross‐class coalitions of low‐wage workers and capital‐intensive firms. Some capital‐using, labor‐saving technical changes that raise capitalists' profits in current prices lower the equilibrium profit rate.     

风险及其商品特性分析

通过对不同风险定义内涵的剖析,结合风险利益和交换的概念,第一次对(投机)风险的商品特性进行了说明,明确提出了风险交换的概念,并对有关问题,特别是投机在经济社会中的积极作用进行了全面的分析。     

Fragmentation and complementarity: The case of EFPs

With the proliferation of alternative markets, concerns have arisen that they may induce lower liquidity on centralized exchanges. In futures markets, the use of an alternative trading mechanism known as exchange of futures for physicals (EFPs) has increased sharply in recent years. EFPs provide a means to obtain futures positions, coupled with offsetting cash positions, away from the centralized exchange. Traders use EFPs to ensure a desired price on complex packages of trades, thus avoiding the transactional risk (slippage) that is inherent in the centralized market. Theoretical analysis establishes that any detrimental effects of fragmenting the centralized market can be offset by traders' knowledge of another opportunity to trade without transactional risk. If EFPs attract more risk‐bearing capacity, there could even be a net benefit to the central market. An empirical analysis suggests that EFP trading is motivated by transactional risk because it represents a larger portion of total trading during periods of unusually high volatility when slippage is apt to be more of a problem. Consistent with the notion that alternative markets can be complementary to centralized exchanges, we find that EFP trading is not associated with reductions in market quality and may act as an outlet for extra volume when markets are under the most stress. © 2002 Wiley Periodicals, Inc. Jrl Fut Mark 22:697–727, 2002     

Relationship marketing: Back to basics?

Relationship marketing, however defined, has received considerable attention recently. To its advocates, relational exchange between buyer and seller represents a paradigm shift away from the traditional focus on individual transactional exchanges. Critics of relationship marketing argue that the concept is poorly defined and is merely a new way of describing what businesses have been doing for a long time.

This paper recognizes that the need to develop long‐term relationships between an organization and its customers is becoming greater. It is however questioned whether marketing educators are providing students with the abilities to take a mature approach to relationship marketing issues, in line with the changing nature of employers' business. Suggestions for introducing relationship marketing to the undergraduate syllabus are made at a number of levels, from an additional module for an introductory “principles of marketing course” to a multi‐disciplinary degree majoring in relationship marketing.     

Exchange‐rate Misalignments in Duopoly: The Case of Airbus and Boeing

We examine the effect of exchange‐rate misalignments on competition in the market for large commercial aircraft. This market is a duopoly where players compete in dollar‐denominated prices while one of them, Airbus, incurs a large fraction of its costs in euro. We estimate price elasticities for big aircraft, and construct a simulation model to investigate how companies adjust their prices to deal with the effects of a temporary misalignment and how this affects profit margins and volumes. We conclude that, due to the duopolistic nature of the aircraft market, Airbus will pass only a small part of the exchange‐rate fluctuations on to customers. Moreover, due to features specific to the aircraft industry, such as customer switching costs and learning‐by‐doing, even a temporary departure of the exchange rate from its long‐run equilibrium level may have permanent effects on the industry.     

Are ASEAN Countries Havens for Japanese Pollution‐Intensive Industry?

In an era of closer worldwide economic integration, the role that environmental regulations play in shaping a country's comparative advantage is greater than ever. This has led to fears that ‘dirty’ firms will relocate from developed to developing countries where environmental regulations may be less stringent – the so‐called pollution haven hypothesis. To date, however, there is little support for the existence of pollution havens despite anecdotal evidence and the theoretical predictions. In this paper we employ a unique industry‐level dataset for Japan and examine whether Japanese industries have relocated production to their ASEAN neighbours in response to the relative stringency of Japanese environmental regulations. Not only do we find no evidence for pollution‐haven‐consistent behaviour but also some indication that the complex relationship between the characteristics of Japanese dirty industries and environmental regulations may actually have reduced Japanese outward FDI to the Philippines.     

Redistribution in a Neo‐Kaleckian Two‐country Model

We investigate the interaction between demand‐driven growth and income distribution in open economies, by combining expenditure‐switching and demand spillover effects in a neo‐Kaleckian two country model. First, we specify elasticities of wage share and real exchange rate to the money wage relative to labor productivity, in order to precisely describe the distributive pass‐through from money wages to the labor share and the real exchange rate. Second, we analyze the demand effects of an increase in the money wage for given labor productivity (a redistribution towards labor) in both Home and Foreign country, as well as globally. We derive closed form results for two identical countries. These results indicate that redistribution towards labor at Home: (i) always increases growth globally if Home is wage‐led, but can lead to lower growth at Home relative to Foreign; and (ii) will always imply lower growth at Home relative to Foreign if Home is profit‐led, but can still be growth‐enhancing at Home. Thus, to the extent that countries are concerned with their relative economic performance, a fallacy of composition can emerge. Numerical simulations suggest that these fallacies could indeed occur. As a consequence, ‘returns to coordination’ over international labor policies might be substantial.     

Moments of truth in gift exchanges: A critical incident analysis of communication indicators used to detect gift failure

This research examines how gift recipients communicate gift failure to givers, whether through paralinguistic indicators, direct verbal comments, and consumption (or not) of the gift. Critical incident reports identified specific communication indicators that signaled displeasure with the gift and measured the impact of these indicators on important exchange outcomes. Overall, failed gifts have a greater impact on future exchanges than on relationship quality. However, failure to appreciate the gift can have a significant negative effect on relationships. Gift failures between friends, co‐workers, and in‐laws are more susceptible to relationship harm than those involving close kin, like parents, spouses, and children. © 2006 Wiley Periodicals, Inc.     

The impact of capital requirements on banks’ cost of intermediation and performance: The case of Egypt

In 1991, the Central Bank of Egypt increased the minimum capital requirements for the banking industry vis-à-vis risk-weighted assets to 8%, along the lines proposed by the Basel Committee on Banking Supervision. In this paper, we investigate the effects of capital regulations on cost of intermediation and profitability. Higher capital adequacy increases the interest of shareholders in managing banks’ portfolios. The result is a higher cost of intermediation and profitability. A number of factors have increased the cost of intermediation in the post-capital regulation period: higher capital-to-assets ratios, an increase in management efficiency, an improvement of liquidity and a reduction in inflation. The reduction in output growth countered these effects. A number of factors contributed positively to banks’ profitability in the post-regulation period: higher capital requirements, the reduction in implicit cost, and the increase in management efficiency. The reduction in economic activity had opposite effects on banks’ profitability. Overall, the results support the Central Bank's efforts to enforce capital regulations to improve the performance of the banking sector in Egypt.     

Pricing efficiency of the S&P 500 index market: Evidence from the Standard & Poor's Depositary Receipts

Standard & Poor's Depositary Receipts (SPDRs) are exchange traded securities representing a portfolio of S&P 500 stocks. They allow investors to track the spot portfolio and better engage in index arbitrage. We tested the impact of the introduction of SPDRs on the efficiency of the S&P 500 index market. Ex‐post pricing efficiency and ex‐ante arbitrage profit between SPDRs and futures were also examined. We found an improved efficiency in the S&P 500 index market after the start of SPDRs trading. Specifically, the frequency and length of lower boundary violations have declined since SPDRs began trading. This result is consistent with the hypothesis that SPDRs facilitate short arbitrage by simplifying the process of shorting the cash index against futures. Tests of pricing efficiency comparing SPDRs and futures suggested that index arbitrage using SPDRs as a substitute for program trading in general results in losses. Although short arbitrages earn a small profit on average, gains are statistically insignificant. A trade‐by‐trade investigation showed that prices are instantaneously corrected after the presence of mispricing signals, introducing substantial risk in arbitraging. Evidence in general supported pricing efficiency between SPDRs and the S&P 500 index futures—both ex‐post and ex‐ante. © 2002 Wiley Periodicals, Inc. Jrl Fut Mark 22:877–900, 2002     

Age differences in career activities among higher‐level employees in the Netherlands: a comparison between profit sector and non‐profit sector staff

The present study describes age differences in the occurrence of career activities among profit sector and non‐profit sector employees in the Netherlands. Three different types of variables have been studied, i.e. individual, job‐related and organizational variables. Hypotheses have been tested with original survey data from 423 profit sector employees and 136 non‐profit sector employees. The employees are all working in higher‐level jobs in large organizations. Overall, we may conclude from this study that the differences between profit sector and non‐profit sector workers are not consistent at all. For some factors the situation is more advantageous for profit sector employees, whereas for other factors the outcomes point in the opposite direction. Regarding age effects, we have found that, in general, for profit sector employees the differences between starters (20–34 years) and middle‐aged workers (35–49 years) are not univocal, whereas the differences between middle‐aged workers and seniors (over‐fifties) imply that the amount of individual initiatives and organizational activities is less for the latter group of employees. When the three age groups are compared for the non‐profit sector employees, most factors do not vary significantly. For the factors where the F‐test is found to be significant, by and large, the situation regarding the possibilities for a further career development is worst for the seniors.     

网络广告交换自动匹配模型构建

网络广告交挨是中小企业网站推广的常用方法之一。目前,我国广告交换市场人工匹配存在着许多弊端,存在很多价值不同的资源广告交换情况。为优化网络广告资源分配,利用满足最大数量广告位自动匹配的图模型,采用广告位作为节点,用广告交换者之间的供需信息作为孤构建模型,即给出模型的求解思路。模型可以产生若干广告位交换推荐信息供平台人员做决策参考,以促进交易的发生,带动整个广告交换平台的发展,实现广告交换资源的自动最大匹配。     

Success Factors in Cooperative Online Marketplaces: Trust as the Social Capital and Value Generator in Vendors-Exchange Relationships

The business reliance on cooperative online exchanges for business-to-business transactions is on the rise. This paper examines the factors contributing to the success of vendor-exchange relationships in this type of marketplace. We use a Critical Realism approach to identify constructs salient to vendors-exchange relationships. A synthesis of value creation, social capital, and trust theories is used for conceptualizing the model. The model is tested using the data from a survey of vendors participating in a cooperative exchange. Results indicated that value creation was the main source of continuance in vendors-exchange relationship. However, the perception of value depended to a larger degree on the relationship quality and to a lesser degree on transactional exchanges (using the exchange's technology solutions as the sources of transaction), indicating the strength and extent of vendors-exchange relationship is an intangible asset for the exchange company. We also found that the exchange company's innovativeness was critical to the perceived quality of transactional exchanges, whereas perception of unfair treatment and communication quality influenced relationship quality. The results also indicated that trust was the main source for the social capital that contributed to perceived value of relationship. The ability of the exchange company to build a community was another factor contributing to the success of this relationship.