What's in it for us? Or: the impact of environmental legislation on competitiveness

The dispute on the impact of environmental legislation on international trade, national competitiveness, technological innovativeness and companies' profitability is as yet undecided. The predominant positions will be illustrated in the following meso/micro‐study detailing the impact (European) environmental legislation has on the competitiveness of a large chemical company. This study draws important conclusions and outlines remarkable implications by employing an instrumental distinction between short‐term costs/benefits and longer‐term innovativeness. It can be argued persuasively that environmental legislation has created a rat race among the major players at the (longer‐term) cost of smaller companies. Copyright © 1999 John Wiley & Sons, Ltd and ERP Environment.     

Is the Coach Paid too Much?: Coaching Salaries and the NCAA Cartel

Recently, a great deal of controversy has been generated from the salaries earned by head coaches in the NCAA. Although many figures in the world of sports earn high salaries, one important difference in the case of the NCAA is that the players do not get paid. We develop a model that shows that a cartel agreement to not pay the players raises the coach's salary if some players choose where to play based on the identity of the coach. The agreement not to pay the players improves competitive balance in the baseline model, but this result does not generalize.     

Implications of the Bosman ruling for football transfer markets

This paper seeks to assess the implications of the 1995 Judgement of the European Court of Justice on the case of Jean-Marc Bosman for the operation of football transfer markets. Although it is inevitable that many more out-of-contract footballers will be able to move between dubs without payment of transfer fees to the selling club, it is argued that there remains a role for transfer markets in professional football, with compensation to selling clubs for training, development and replacement of players.     

Human capital, instability and foreign investment in transition economies

I argue that the West should lend money to the former Soviet Union and Eastern Europe (FSUEE) to prevent excessive deterioration of its human capital stock. Such loans can improve the recipient countries' welfare by allowing them to enjoy the long-run benefits of a large human capital stock without incurring the costs of maintaining these stocks through lean economic times. The West can receive a fully competitive rate of return on these loans, and future foreign investors will be able to earn high rates of return by supplying physical capital to a newly stabilized FSUEE with abundant human capital.     

The future shape of harmonization: the EU versus the IASC versus the SEC

The paper analyses the implications of the EUs proposal to permit large multi-national corporations (global players) to present their consolidated accounts in accordance with the IASs of the IASC. After an analysis of the problems faced by both the EU and the global players, it considers the chances of the EU and the IASC reaching agreement. A major problem is identified as being that the IASC is dominated by the Anglo-American approach to financial reporting which is fundamentally different from the Continental European approach followed in the EUs directives. It is felt that a compromise might be achieved if both the EU and the IASC agreed to restrict the application of IASs to the consolidated accounts of the global players. Finally the position of the American SEC is considered in the light of the IASC-IOSCO agreement. The paper concludes that it is improbable that the SEC will accept the IASs for listing purposes on Wall Street.     

Network formation models with costs for establishing links

Abstract. In this paper we study endogenous formation of communication networks in situations where the economic possibilities of groups of players can be described by a cooperative game. We concentrate on the influence that the existence of costs for establishing communication links has on the communication networks that are formed. The starting points in this paper are two game-theoretic models of the formation of communication links that were studied in the literature fairly recently, the extensive-form model by Aumann and Myerson (1988) and the strategic-form model that was studied by Dutta et al. (1998). We follow their analyses as closely as possible and use an extension of the Myerson value to determine the payoffs to the players in communication situations when forming links is not costless. We find that it is possible that as the costs of establishing links increase, more links are formed.     

Acquisition of skills, labor subsidies, and agglomeration of firms

The paper develops an analytically solvable model of new economic geography in which agglomeration of firms is caused by workers' investment in the acquisition of skills. Skilled workers earn high wages and have a large demand for goods. Since firms are attracted towards the demand, they locate at proximity of skilled workers. More workers invest in the acquisition of skills when more firms ask for these skills. Consequently, partial or full agglomeration of firms may be the location equilibrium. We also show that a reduction in transport costs increases the regional governments' incentives to subsidize the acquisition of skills.     

Risk preference heterogeneity in group contests

We analyze the first model of a group contest with players that are heterogeneous in their risk preferences. In our model, individuals’ preferences are represented by a utility function exhibiting a generalized form of constant absolute risk aversion, allowing us to consider any combination of risk-averse, risk-neutral, and risk-loving players. We begin by proving equilibrium existence and uniqueness under both linear and convex investment costs. Then, we explore how the sorting of a compatible set of players by their risk attitudes into competing groups affects aggregate investment. With linear costs, a balanced sorting (i.e., minimizing the variance in risk attitudes across groups) always produces an aggregate investment level that is at least as high as an unbalanced sorting (i.e., maximizing the variance in risk attitudes across groups). Under convex costs, however, identifying which sorting is optimal is more nuanced and depends on preference and cost parameters.     

Pay,productivity and aging in Major League Baseball

Using panels of player pay and performance from Major League Baseball (MLB), we examine trends in player productivity and salaries as players age. Pooling players of all ability levels leads to a systematic bias in regression coefficients. After addressing this problem by dividing players into talent quintiles, we find that the best players peak about 2 years later than marginal players, and development and depreciation of performance appear to be more pronounced for players with the highest ability levels. Within-career variation, however, is less pronounced than between-player variation, and the performance level of players within a given quintile will typically remain lower than the talent level for rookies in the next higher quintile. We also find preliminary evidence that free agents are paid proportionately to their production at all ability levels, whereas young players’ salaries are suppressed by similar amounts.     

Impact of importing foreign talent on performance levels of local co-workers

When skilled labour is imported to work in a creative industry, local workers may benefit, in terms of their own level of skill, through contact with new techniques and practices. European basketball offers an opportunity to investigate the reality of this general claim. For a panel of 47 European countries observed over more than twenty years, we model probability of qualification for, and subsequent performance in, Olympic Tournaments and World and European Championships. We demonstrate that, consistent with the spillover hypothesis, an increase in the number of foreigners in a domestic league tends to generate a subsequent improvement in the performance of the national team (which has to be comprised only of local players).     

Discriminatory input pricing and strategic delegation

This paper examines how discriminatory input pricing by an upstream monopolist affects the incentives that owners of downstream duopolists offer their managers. Regardless of the mode of competition (quantity or price), owners of downstream firms induce their managers to be more profit‐oriented and to behave less aggressively when the monopolist is allowed to price‐discriminate than when he charges a uniform price. If the monopolist price‐discriminates, managerial downstream firms always earn more than owner‐managed profit‐maximizing firms. However, if the monopolist charges a uniform price, managerial downstream firms earn more than profit‐maximizing counterparts under price competition and earn less under quantity competition. Copyright © 2009 John Wiley & Sons, Ltd.     

Customer Privacy and Competition

We analyze how different degrees of privacy protection affect industry profits, consumer welfare, and total welfare in a model with switching costs. Firms earn higher profits under weak privacy protection compared with strong or no privacy protection. The relationship between the degree of privacy protection and equilibrium profits is not monotonic. Consumer surplus and total welfare increase with the degree of privacy protection unless firms recognize consumer‐specific switching costs. In that case, pricing conditional on switching costs has favorable implications for consumer surplus and total welfare.     

Learning strategic cooperative behavior in industrial symbiosis: A game‐theoretic approach integrated with agent‐based simulation

This paper investigates the negotiation phase of industrial symbiosis relationships, where companies exchanging wastes for inputs need to develop strategies on how to share the additional costs to operate the industrial symbiosis business. The business behavior is approached as a “coopetition” problem where companies need to cooperate to reduce waste discharge costs and traditional input purchase costs and dive into competition to pay a minimum share of additional costs (i.e., waste treatment, waste transportation, and transaction costs) of operating industrial symbiosis. A noncooperative game‐theoretical model for sharing the additional costs is proposed that highlights the two strategies that companies can adopt aimed at sharing costs: a fair strategy and an opportunistic strategy. Then, an agent‐based model is used to simulate the game iterated over time and investigate how the players can adapt their strategies according to their past experience. Simulation results show that players learn that playing the fair strategy is beneficial in the long period, despite in the short period they can gain more benefit by playing the opportunistic strategy. Findings of the paper are critically important to reduce the business and managerial barriers against the formation of industrial symbiosis networks and to stimulate innovative thinking of company managers to foster the development of the circular economy. The paper proposes theoretical, managerial, and policy implications, which are discussed in detail in a comparative manner between linear and circular economy.     

Herding versus Hotelling: Market Entry with Costly Information

Why do businesses such as fast‐food restaurants, coffee shops, and hotels cluster? In the classic analysis of Hotelling, firms cluster to attract consumers who have travel costs. We present an alternative model where firms cluster because one firm is free riding on another firm's information about market demand. One consequence of this free riding is that an informed firm might forego a market that it knows to be profitable. Furthermore, an uninformed firm might earn higher profits when research costs are high, because it can credibly commit to ignorance.     

Industry-specific or generic skills? Conflicting interests of firms and workers

Firms and workers may have conflicting interests with respect to the content of training programmes. On the basis of a model for the investment decision in industry-specific and generic training, I will show that, in the case of imperfect competition for industry-specific skills, workers want more generic training than is socially optimal because the level of generic training puts a lower bound on the wages workers will earn after completing the training, irrespective of whether they stay in the industry or move. Firms, on the other hand, want the generic component of the training to be as low as possible because it decreases their expected returns to industry-specific training.     

Toward Monetary Union of the European Community

A bstract . European Community monetary integration has received periodic attention often as a result of financial crises but has now evolved into its major aim. To achieve this goal the European Monetary System was established in 1979. It was designed to provide a tool, the Exchange Rate Mechanism , for exchange rate stabilization and convergence of economic and monetary policies. To give further impetus to monetary integration the Maastricht Treaty was approved in December 1991. Experiences with the operation of the European Monetary System show that there is no conclusive evidence that it has disciplined the monetary and fiscal policies of all its members. More recently, Germany's insistence on a tight monetary- policy, to fight the inflation that resulted from unification costs, has brought turmoil in European financial markets and has dealt a serious blow to the system. Furthermore, the ensuing recession and its impact on the European economies make improbable that the timetable of the Maastricht Treaty will be met.     

British industrial relations and the European Community

The purpose of this paper is to review the influence that Britain's membership of the European Community has had on industrial relations in Britain. More specifically the so-called ‘Social Dimension’ of the 1992 internal market is assessed. The conclusion is that British industrial relations will continue to be influenced by developments in the European Community for the rest of the 1990s and beyond. However, it is more likely that there will be a weaving of a European dimension into national industrial relations systems rather than the imposition of a new EC-wide model.     

Cost-sharing in directed networks: Experimental study of equilibrium choice and system dynamics

This study reports the results of an experiment on directed networks with positive externalities induced by cost-sharing. Subjects participated in a network game in which they had to choose between private and public transportations. If a player chose public transportation, then she shared the travel cost equally with other players making the same choice, whereas if she chose private transportation, then her travel cost was fixed. Travel costs on the private route were manipulated across the two experimental conditions. In one condition, these costs were homogeneous among players; in the other condition, they were heterogeneous among players and only privately known. We found that half (none) of the player groups in the homogeneous (heterogeneous) condition converged toward the efficient equilibrium. Examination of the system dynamics shows that convergence toward efficiency was facilitated by: (1) the existence of an intermediate equilibrium choice; and (2) strategic teaching by which a farsighted player chooses strategies with poor short-term payoff in order to shift group decisions to the efficient equilibrium and thereby increase her own long-term benefit.     

The European sectoral social dialogue: questions of representation and membership

In the debates on the European social dialogue as a potential level of supranational industrial relations, the key questions of representations and mandates are often neglected. To what extent can the European sectoral social dialogue act for national constituencies across 27 Member States in the perspective of collective action by European associations? This article addresses this question by the means of three dimensions: the representation of heterogeneous members, the various degrees of national players' commitment in the European committees and finally, the definition of a common agenda among members.