R&D INVESTMENTS AND SEQUENTIAL WAGE NEGOTIATIONS*

This paper analyses how the structure of wage bargaining affects R&D investment by firms that increases the productivity of labour in a Cournot duopoly. We find that total expenditure on R&D is greater when wages are set simultaneously than when they are set sequentially. Thus sequential wage negotiations reduce the incentive for firms to innovate and affect the productivity of labour. When wage negotiations are sequential the productivity of labour is greater (lower) in the follower (leader) firm than when negotiations are simultaneous. We also obtain that for same parameter values it is possible for the firm with the lower productivity to end up paying a higher wage than the firm with the higher level of labour productivity.     

Eco-labels, Trade and Protectionism

Eco-labels are suspected to serve protectionist purposes. We analyze the choice between an environmental standard and a voluntary eco-label scheme in a partial trade model with one domestic firm and one foreign firm. The environmental standard will only apply to the domestic firm, while both firms can adopt the eco-label. Pollution is production related, and domestic consumers demand products that are produced in an “environmentally friendly” way. Our results show that it may be optimal for the domestic government to introduce an eco-label and get both firms to adopt the label, instead of setting an environmental standard. However, to what extent this policy serves protectionist purposes is ambiguous. In particular, if the willingness to pay for green products is sufficient to cover the pollution abatement costs of the foreign firm, foreign firm profit will increase while domestic firm profit will decrease compared to the outcome with a domestic environmental standard. On the other hand, if the willingness to pay for green products is insufficient, the foreign firm would be better off with a domestic environmental standard.     

Employee share ownership in a unionised duopoly

Profit sharing schemes have been analysed assuming Cournot competition and decentralised wage negotiations, and it has been found that firms share profits in equilibrium. This paper analyses a different remuneration system: employee share ownership. We find that whether firms choose to share ownership or not depends on both the type of competition in the product market and the way in which workers organise to negotiate wages. If wage setting is decentralised, under duopolistic Cournot competition both firms share ownership. If wage setting is centralised, only one firm shares ownership if the degree to which goods are substitutes takes an intermediate value; otherwise, the two firms share ownership. In this case, if the union sets the same wage for all workers neither firm shares ownership. Therefore, centralised wage setting discourages share ownership. Finally, under Bertrand competition neither firm shares ownership regardless of how workers are organised to negotiate wages.     

On intrabrand and interbrand competition: The strategic role of fees and royalties

We examine oligopolistic markets with both intrabrand and interbrand competition. We characterize equilibrium contracts involving a royalty (or wholesale price) and a fee when each upstream firm contracts with multiple downstream firms. Royalties control competition between own downstream firms at the expense of making them passive against rivals. When the number of downstream firms is endogenous, each upstream firm chooses to have only one downstream firm. This result is in sharp contrast to previous literature where competitors benefit by having a larger number of independent downstream firms under only fixed fee payments. We discuss why allowing upstream firms to charge per-unit payments in addition to fixed fees dramatically alters their strategic incentives.     

Environmental regulatory enforcement with “green” consumers

We consider a standard probabilistic model of random monitoring to analyze the interactions between a firm and a monitoring agency in the presence of “green” consumers when compliance payoffs are contingent on monitoring and monitoring costs are shared by the monitoring agency and the firm. When the amount paid by the firms if monitored is exogenously fixed, we find that full compliance is implemented with a finite fine. If there is an upper bound for the fine and the regulator determines endogenously the fine and the amount paid by the firms if monitored, we find that full compliance is also achieved, although the optimal fine is now set at its maximum level. The optimal amount paid by the firms if monitored is lower than the environmental premium the compliant firm gets.The author thanks two anonymous referees for their useful comments and suggestions     

The environmental performance of firms: The role of foreign ownership, training, and experience

In this paper we extend the debate on the environmental implications of foreign direct investment in developing countries by examining a new mechanism through which foreign influence can affect the environmental performance of firms. We focus on the extent to which key workers who have had previous training or experience in a foreign owned firm transfer and utilise their knowledge gained to the benefit of the local environment. To this end we use detailed firm-level data on manufacturing firms in Ghana. Our econometric results suggest that the foreign training of a firm's decision maker does reduce fuel use, particularly so in foreign owned firms. Foreign ownership per se does not influence fuel use or total energy use but is found to increase electricity use, perhaps the cleanest form of energy used by Ghanaian firms.     

政企合谋、环境规制与企业全要素生产率*

本文利用中国工业企业数据库和地级市层面的企业治污投资数据构建了一个2003—2007年的面板,实证检验了环境规制对企业全要素生产率的影响以及政企合谋在背后的作用。实证结果表明,用企业治污投资占工业增加值比重衡量的环境规制强度每上升1%,企业当期的生产率下降约1%。当政企合谋可能性上升时,环境规制对企业生产率的边际影响在减弱,说明政企合谋带来的监管放松和处罚不力弱化了环境规制对合谋企业生产率的影响。本文的政策启示在于中央政府应加强环保领域统一执法,破解囚徒困境式的环境规制。同时,本文的发现为环保机构监测监察执法垂直管理制度改革提供了合理性依据。     

International production chains and the pollution offshoring hypothesis: An empirical investigation

Most analyses of the impact of heterogeneous environmental policy stringency on the location of industrial firms have considered the relocation of entire activities – the well-known pollution haven hypothesis. Yet international enterprises may decide to only offshore a subset of their production chain – the so-called pollution offshoring hypothesis (POH). We introduce a simple empirical approach to test the POH combining a comprehensive industrial mergers and acquisitions dataset, a measure of sectoral linkages based on input-output tables and an index score of environmental policy stringency. Our results confirm the impact of relative environmental policy stringency on firms’ decisions to engage in cross-country M&As. Our findings also indicate that environmental taxation have a stronger impact on international investment decisions than standards-based policies. Further, we find that transactions involving a target firm operating in a sector upstream of the acquirer are more sensitive to environmental policy stringency, especially when that sector is highly pollution-intensive. This empirical evidence is consistent with the pollution offshoring hypothesis.     

Unionization,international integration,and selection

Abstract We study how unionization affects competitive selection between heterogeneous firms when wage negotiations can occur at the firm or at the profit‐centre level. With productivity specific wages, an increase in union power has: (i) a selection‐softening; (ii) a counter‐competitive; (iii) a wage‐inequality; and (iv) a variety effect. In a two‐country asymmetric setting, stronger unions soften competition for domestic firms and toughen it for exporters. With profit‐centre bargaining, we show how trade liberalization can affect wage inequality among identical workers both across firms (via its effects on competitive selection) and within firms (via wage discrimination across destination markets).     

环境规制对现存企业迁移行为的影响研究

在城市化发展过程企业渐渐由中心区迁往外围区域,鲜有研究从这一视角观察企业迁移行为。本文从环境规制的角度对现存企业的迁移行为进行了探讨。实证分析发现在省级层面,废水污染费征收率提升显著减少企业在城市之间迁移的数量,废气污染费征收率提高增加企业城市之间迁移的数量。在企业层面环境规制增强显著提升企业在县区之间迁移的概率。利用国家贫困县名录,进一步发现废气污染费率增加显著提升企业往县和贫困县迁移的概率。进一步分析发现加入WTO、2003年污染费征收改革后污染费上升时企业显著提高向贫困县迁移的概率。最后本文发现环境规制提高了企业的创新水平以规避环境规制成本从而降低了迁移的概率。     

Consumer confusion over the profusion of eco-labels: Lessons from a double differentiation model

How are eco-label strategies affected by consumer confusion arising from the profusion of eco-labels? This article provides a theoretical insight into this issue using a double differentiation framework. We assume that consumers perceive a label as a sign of quality compared to an unlabeled product, but that they cannot fully assess the environmental quality associated with each label and only see each label as a particular variety of a similar product. We analyze the pricing strategies of three firms, each one providing one product: a labeled product, with high or medium environmental quality, according to the eco-label, or an unlabeled product. We infer lessons for eco-labeling policies, according to the identity of the certifying organization: the regulator, an NGO or the firms. We show that the firm supplying the eco-labeled product with a high environmental quality is weakened by consumer confusion while the firm selling the unlabeled product suffers from strict labeling standards, to the benefit of the firm providing the labeled product with a lower environmental quality, which gains a competitive advantage. Most labeling policies consist of harmonizing labeling criteria, but only certification by a third party, the regulator or a NGO, guarantees the high environmental quality of labeled products, whereas certification by firms leads to a uniform undemanding standard. However, when both labels are provided by two different certifiers, including a firm, harmonization of environmental standards does not occur and the NGO's or regulator's eco-labeling standard will be much more stringent than the firm's one, preventing NGO's or public eco-labeling policy to significantly enhance quality of the environment and welfare.     

Endogenous timing in a mixed oligopoly with semipublic firms

An endogenous order of moves is analyzed in a mixed market where a firm jointly owned by the public sector and private domestic shareholders (a semipublic firm) competes with n private firms. We show that there is an equilibrium in which firms take production decisions simultaneously. This result is strikingly different from that obtained by Pal (Econ Lett 61:181–185, 1998), who shows that when a public firm competes with n private firms all firms producing simultaneously in the same period cannot be sustained as a Subgame Perfect Nash Equilibrium outcome. Our result differs from that of Pal (Econ Lett 61:181–185, 1998) for two reasons: firstly, we consider that there is a semipublic firm rather than a public firm. Secondly, Pal (Econ Lett 61:181–185, 1998) considers that the public firm is less efficient than private firms while in our paper all firms are equally efficient.     

Lobbying and the power of multinational firms

Can multinational firms exert more power than national firms by influencing politics through lobbying? To answer this question, we analyze the extent of national environmental regulation when policy is determined in a lobbying game between a government and a firm. We compare the resulting equilibrium regulation levels, outputs and welfare in a game with a multinational firm with those in an otherwise identical game with a national firm. For low transportation costs, output and pollution of a national firm are always as least as high as for a multinational; this changes for high transportation costs and intermediate damage parameters. When there is no lobbying, welfare levels are always higher with multinationals than with national firms. However, the existence of lobbying may reverse this ordering.     

Interfirm learning in environmental safety: evidence from the bakken

This paper examines whether firm learning economies lead to reduced environmental incidents in Bakken unconventional oil drilling. We model the relationship between environmental safety and learning in preventing environmental incidents. We do not find evidence that firm or interfirm learning leads to increased environmental safety. We do find evidence that idiosyncratic quality of matches between firms and subcontractors is associated with improved environmental safety.     

Post-privatization corporate governance and firm performance: The role of private ownership concentration,identity and board composition

We examine and analyze the post-privatization corporate governance of a sample of 52 newly privatized Egyptian firms over a period of 10 years, from 1995 to 2005. We look at the ownership structure that results from privatization and its evolution; the determinants of private ownership concentration; and the impact of private ownership concentration, identity and board composition on firm performance. We find that the state gives up control over time to the private sector, but still controls, on average, more than 35% of these firms. We also document a trend in private ownership concentration over time, mostly to the benefit of foreign investors. Firm size, sales growth, industry affiliation, and timing and method of privatization seem to play a key role in determining private ownership concentration. Ownership concentration and ownership identity, in particular foreign investors, prove to have a positive impact on firm performance, while employee ownership concentration has a negative one. The higher proportion of outside directors and the change in the board composition following privatization have a positive effect on firm performance. These results could have some important policy implications where private ownership by foreign investors seems to add more value to firms, while selling state-owned enterprises (SOEs) to employees is not recommended. Also, the state is highly advised to relinquish control and allow for changes in the board of directors following privatization as changing ownership, per se, might not have a positive impact on firm performance unless it is coupled with a new management style.     

Corporate Environmental Management and Environmental Efficiency

This paper examines the potential of environmental management systems (EMSs) to provide opportunities for reducing toxic releases cost-effectively and increasing environmental efficiency of a sample of S&P 500 firms. We use directional distance function to estimate firm-specific environmental efficiency. A truncated regression model with bootstraping is then estimated to analyze the determinants of the environmental efficiency of firms. The analysis shows that the comprehensiveness of an EMS, pressures to reduce toxic releases cost-effectively, innovativeness of firms and the threat of costly regulations in the future lead firms to become more environmental efficient. Regression results indicate that increasing the comprehensiveness of EMS by adopting one additional practice benefits the average firm by approximately US$ 35.5 million by increasing its environmental efficiency by 0.3%.     

Consumer inertia, firm growth and industry dynamics

We develop a model of firm size, based on the hypothesis that consumers are “locked in,” because of search costs, with firms they have patronized in the past. As a consequence, older firms have a larger clientele and are able to extract higher profits. The equilibrium of this model yields: (i) A downward sloping density of firm sizes. (ii) Older firms are less likely to exit than younger firms. (iii) Larger firms spend more on R&D.     

An evolutionary model of recycling and product lifetime extension

This paper presents a model-based analysis of the development and diffusion of so-called ‘green’ products, i.e. those which are easily recyclable and which have a long lifetime. We address this problem by developing an evolutionary simulation model to identify the impact of the environmental R&D strategies of business firms on the economy and the environment. The simulation results show that R&D investment both in product recyclability and in product lifetime extension can be positive for the firm. Adopting such a strategy means that the firm can then market green products, which provides it with a competitive advantage on firms investing mainly in product recyclability whatever consumers' preferences. From an environmental point of view, the diffusion of green products will reduce both waste flows in the economy and pressure on virgin resources. However, diversifying R&D investment to develop both product recyclability and lifetime can mean slowing down the flow of recycled materials and may lead to even greater quantities of unrecycled waste. Our results suggest introducing regulation policies aiming at encouraging firms to invest both in product recyclability and lifetime in order to benefit from their complementarities. Furthermore, simulations show that it should be better to direct environmental policies on firms' environmental innovation strategies than on demand attributes because significant changes in these strategies would provide much more radical environmental changes.     

When do firms support environmental agreements?

Several firms have recently supported their countries’ participation in international environmental agreements where countries commit to stricter environmental regulation. This paper analyzes the rationale of this conduct by examining equilibrium emission standards with and without environmental treaties. We identify that more stringent environmental regulation produces two effects on firm profits: a negative effect due to larger abatement costs, and a positive effect that arises from the amelioration of duopoly overproduction. We describe under which conditions the positive effect dominates the negative effect, increasing firm profits, and inducing them to support their countries’ participation in environmental treaties.     

Who invests more in advanced abatement technology? Theory and evidence

We study firm investment in abatement technology under a heterogeneous‐firm framework. We find that more‐productive firms make more (less) investment in abatement technology if investment and productivity are complements (substitutes). Under linear demand, firms’ abatement investments exhibit an inverted U‐shape with respect to productivity level. This finding is in contrast to results in existing studies. We also find that in response to tightened environmental regulations, more‐productive firms raise their respective investments in abatement technology, whereas less‐productive firms do the opposite. More‐productive firms have lower pollution emission intensity. The key theoretical predictions are confirmed by empirical tests using Chinese data.