Can real-effort investments inhibit the convergence of experimental markets?

Evidence shows that real-effort investments can affect bilateral bargaining outcomes. This paper investigates whether similar investments can inhibit equilibrium convergence of experimental markets. In one treatment, sellers' relative effort affects the allocation of production costs, but a random productivity shock ensures that the allocation is not necessarily equitable. In another treatment, sellers' effort increases the buyers' valuation of a good. We find that effort investments have a short-lived impact on trading behavior when sellers' effort benefits buyers, but no effect when effort determines cost allocation. Efficiency rates are high and do not differ across treatments.     

Competition in wholesale markets: Do MNOs compete to host MVNOs?

This paper extends previous research examining wholesale market shares of mobile network operators (MNOs). This study demonstrates that wholesale market concentration has decreased over time because of the increase of competition of MNOs for hosting mobile virtual network operators (MVNOs). However, differences in wholesale market shares between MNOs have not disappeared. We propose that those operators that are late entrants in a market and belong to an international group with a proactive attitude towards hosting virtual operators positively influences wholesale market shares of MNOs. The empirical analysis is based on a panel data from 2000 to 2010 corresponding to MNOs and virtual operators in five European countries with high development of the virtual mobile industry. By closely examining KPN we show how being an international mobile group specialising in the wholesale market across Europe has enabled it to exploit complementarities that exist between traditional and virtual businesses.     

Small business industrial buyers' price sensitivity: Do service quality dimensions matter in business markets?

One of the major obstacles to effective pricing emanates from difficulties experienced in predicting business buyers' price sensitivity. With a view to obviating these obstacles, this study examines the effect of five key physical distribution service quality dimensions on price sensitivity from the perspective of small and medium retail buyers. Based on a survey of 233 cellular phone retailers in China, the authors articulate how the five salient service quality dimensions exert either direct effects on price sensitivity or indirect impacts through perceived value and customer satisfaction. Theoretical and managerial implications are also provided for effective retailer relationship management, profitability improvement, and customer segmentation in distribution channels.     

Is exclusionary pricing anticompetitive in two-sided markets?

This paper studies the competitive effects of exclusionary pricing in two-sided markets. While formally showing that below-cost pricing on one market side can allow an incumbent firm to exclude a potential rival which does not have a customer base yet, the proposed model does not necessarily imply that below-cost pricing in such markets should be taken as anti-competitive conduct. Instead, I find that in sufficiently asymmetric two-sided markets, exclusion is always beneficial and if anything, there is too little of it in the sense that there are cases in which there is inefficient entry. Further, prohibiting below marginal cost pricing may destroy some socially efficient exclusion and worsen the problem of excessive (or inefficient) entry.     

Does innovation stimulate employment? A firm-level analysis using comparable micro-data from four European countries

We study the impact of process and product innovations introduced by firms on employment growth with random samples of manufacturing and services from France, Germany, Spain and the UK for 1998–2000, totaling about 20,000 companies. We develop and estimate a model relating firms' and industry's employment to innovation, that leads us to the conclusions that follow. Trend increases in productivity reinforced by process innovation are an important source of reduction of employment requirements for a given output, but the growth of demand for the old products tends to overcompensate these displacement effects. The switch of production towards new products does not reduce employment requirements, and the growth of the demand for the new products is the strongest force behind employment creation. Reallocation due to business stealing is estimated at a maximum of one third of the net employment created by product innovators. The growth of employment originated from the market expansion induced by the new products can be as important as another third.     

Do Immigrants Trust Trade Unions? A Study of 18 European Countries

Migrants form growing proportions of national workforces in advanced capitalist societies. Yet little is known about their attitudes towards the principal agents of worker representation in their host countries, the trade unions, much less via cross-national research. Using European Values Survey data, we redress this imbalance by examining migrants’ levels of trust in unions, compared to native-born. We find higher levels of trust in unions by migrants (compared to native-born) in general and especially by migrants during their first decades after arrival and whose countries of origin are characterized by poor quality institutions. These findings have significant implications for unionization strategies towards migrants, especially given received wisdom portraying migrants as indifferent or distrustful towards unions.     

Do strategic groups differ in reputation?

While most strategic group research has focused on performance implications, we consider the relationship between strategic group membership and reputation. Using strategic group identity and domain consensus concepts, we propose strategic groups have different reputations. We find significant differences exist in reputation across three identified strategic groups of U.S. property/casualty insurers, supporting our contention that reputation is a multilevel concept. Post hoc analyses suggest strategic groups with higher reputation also have higher performance on some critical measures, indicating reputation may be a mobility barrier beneficial to members of certain groups. Practitioner implications include challenges of within‐group differentiation in firm reputation. Copyright © 2000 John Wiley & Sons, Ltd.     

How does income inequality affect market outcomes in vertically differentiated markets?

The distribution of consumer incomes is a key factor in determining the structure of a vertically differentiated industry when consumer's willingness to pay depends on her income. This paper computes the Shaked and Sutton (1982) model for a lognormal distribution of consumer incomes to investigate the effect of inequality on firms' entry, product quality, and pricing decisions. The main findings are that greater inequality in consumer incomes leads to the entry of more firms and results in more intense quality competition among the entrants. More intense quality competition raises the average quality of products in the market as firms compete for the shrinking share of higher-income consumers. With zero costs of quality improvements and an upper bound on the top quality or when costs of quality are fixed and rise sufficiently fast, greater heterogeneity of consumer incomes also reduces firms' incentives to differentiate their products. Competition between more similar products tends to reduce their prices. However, when income inequality is very high, the top quality producer chooses to serve only the rich segment of the market and charges a higher price. The conclusion is that income inequality has important implications for the degree of product differentiation, price level, industry concentration, and consumer welfare.     

Do markets and trade help or hurt the global food system adapt to climate change?

Rapidly expanding global trade in the past three decades has lifted millions out of people out of poverty. Trade has also reduced manufacturing wages in high income countries and made entire industries uncompetitive in some communities, giving rise to nationalist politics that seek to stop or reverse further trade expansion in the United States and Europe. Given complex and uncertain political support for trade, how might changes in trade policy affect the global food system’s ability to adapt to climate change? Here we argue that we can best understand food security in a changing climate as a double exposure: the exposure of people and processes to both economic and climate-related shocks and stressors. Trade can help us adapt to climate change, or not. If trade restrictions proliferate, double exposure to both a rapidly changing climate and volatile markets will likely jeopardize the food security of millions. A changing climate will present both opportunities and challenges for the global food system, and adapting to its many impacts will affect food availability, food access, food utilization and food security stability for the poorest people across the world. Global trade can continue to play a central role in assuring that global food system adapts to a changing climate. This potential will only be realized, however, if trade is managed in ways that maximize the benefits of broadened access to new markets while minimizing the risks of increased exposure to international competition and market volatility. For regions like Africa, for example, enhanced transportation networks combined with greater national reserves of cash and enhanced social safety nets could reduce the impact of ‘double exposure’ on food security.     

Does the growth of mobile markets cause the demise of fixed networks? – Evidence from the European Union

The increasing usage of mobile communication and the declining demand for fixed line telephony in Europe make the analysis of substitutional effects between fixed and mobile networks a key aspect for future telecommunication regulation. Using a unique dataset which contains information on all 27 European Union members from 2003 to 2009, we analyze substitutability between fixed and mobile telecommunication services in Europe by applying dynamic panel data techniques. We find strong empirical evidence for substitution from fixed to cellular networks throughout Europe. In addition, the paper reveals resulting policy implications.     

Are products striking back? The rise of smart products in business markets

The business world is experiencing a shift away from ‘physicality’ due to the ubiquitous growth of the service sector and a progressive shift from selling product to offering service. Yet, at the same time, with regard to technology-based phenomena such as the Internet of Things (IoT), it is physical products equipped with sensors that are at the centre of the transformation. Our research seeks to understand how business products become smart products. It focuses on how product physicality (visibility of smartness; additional functions) and product ecosystems (product connectedness; degree of autonomy) are changing, and the resulting issues for marketing managers. We propose a typology of smart products along two dimensions: ‘Product Attributes’ and ‘Ecosystemic attributes’. We distinguish four categories of smart products: More Efficient Products (MEPs), Augmented Products (APs), Products as a Node (PN), and Products as a Hub (PH). In each category, a product acquires a certain degree of ‘digital enhancement’, ‘embeddedness’ and ‘transformativeness’, as we describe. We also discuss several implications of our work both at the theoretical and managerial levels.     

How do strategic factor markets respond to rivalry in the product market?

This paper explores the interplay between product market, strategic factor market, and resource development. More competition in the product market makes resource buyers bid higher for resources, as the value of trying to preempt the resources is higher. Holding other initial conditions constant, resources are developed more in industries with factor markets than in industries without. When buyers of resources cannot integrate more than one resource, developers choose to develop either at a low or high level, generating a type of heterogeneity that would not arise otherwise. Changes in the intensity of competition in the product market can have the opposite effect on resource development efforts depending on the presence or absence of factor markets. Copyright © 2013 John Wiley & Sons, Ltd.     

How can new ventures command a price premium with innovations in emerging markets?

Successful financing is critical for new ventures' survival and future sustainable growth. With the unique institutional characteristics, it is especially difficult for new ventures in emerging economies to transform innovation capital into favorable investor responses (such as willingness-to-pay, WTP) during the process of initial public offerings (IPOs). Based on the patent records from a unique sample of Chinese firms, we demonstrate that new ventures can successfully leverage innovation for higher WTP in IPOs contingent on the existence of venture capital ownership and reputable underwriter endorsements. These financial intermediates can send inside-out and outside-in signals to market investors to reduce information asymmetry. Our study contributes to research on the valuation of innovations in IPOs. We also provide practical implications to managers and investors of new ventures. We provide implication to managers and investors of new ventures on how to increase the benefits from innovations, which fosters national economic growth and social welfare.     

Buy or make? Agricultural production diversity,markets and dietary diversity in Afghanistan

Increasing on-farm production diversity and improving markets are recognized as ways to improve the dietary diversity of smallholders. Using instrumental variable methods to account for endogeneity, we study the interplay of production diversity, markets and diets in the context of seasonality in Afghanistan. We confirm an important seasonal dimension to the interplay. Improved crop diversity over the year is positively associated with dietary diversity in the regular season, but not in the lean season. Livestock species diversity remains important for dietary diversity throughout the year, but particularly so in the lean season when the influence of cropping diversity is low. Market aspects become important for dietary diversity specifically in the lean season.     

The transfer system in European football: A pro-competitive no-poaching agreement?

We assess the proclaimed pro-competitive effects of the “transfer system”, the no-poaching agreement governing the European football (soccer) labor market. A major argument to legitimize this system is that transfer fees, which hiring clubs pay to release players from their current clubs, redistribute revenues from large market to small market clubs. This would strengthen small clubs’ financial clout and their ability to compete in sporting terms. Player transfer fees represent over 10 billion Euros in asset value in the financial statements of the 202 clubs we analyze. Still, small market clubs rarely obtain substantial revenues from the transfer market. The main beneficiaries are clubs around the middle of the market size distribution. A select group of large market clubs makes significant transfer losses, but this does not undo their initial financial advantage. Overall, the transfer system therefore leads to a very minor reduction in revenue inequality.     

Do three-part tariffs improve efficiency in residential broadband networks?

We analyze subscriber usage data from an Internet Service Provider that sells service using three-part tariff and unlimited plans. Subscribers facing three-part tariffs have lower average usage than subscribers on unlimited plans, and differences among heavy users explain nearly all the overall difference. Hence, the three-part tariff saves network costs and narrows the gap, between light and heavy users, in price per Gigabyte used. However, subscribers facing three-part tariffs cut usage similarly during peak and off-peak hours. Since off-peak usage adds no network costs, these off-peak usage reductions lower welfare. Differentially pricing peak usage could further enhance efficiency.     

Do firms sell forward for strategic reasons? An application to the wholesale market for natural gas

Cournot models of oligopolistic interaction in forward and spot markets have shown that firms may sell forward for risk-hedging reasons only, or for both risk-hedging and strategic considerations. Using data from the Dutch wholesale market for natural gas where we observe the number of players, spot and forward sales, churn rates and prices, this paper presents evidence that strategic reasons play an important role at explaining the observed firms’ hedging activity. Our test for strategic behavior is based on the theoretical relationship between the number of sellers and the incentives to sell forward: if risk-hedging is the only motive behind firms’ decision to sell forward, then hedging activity ought to decrease in the number of firms; otherwise, if strategic reasons are relevant, then firms incentives to sell forward should increase in the number of competitors.     

Do Unions Help or Hinder Women in Training? Apprenticeship Programs in the United States

Trade unions are frequently criticized for excluding women from skilled crafts by denying them training. This article examines this argument by eestimatin the retention and attrition probabilities of men and women in the joint union‐management and the unilateral employer‐sponsored apprenticeship programs. While men, on average, have higher retention and lower attrition rates than women, joint sponsorship raises women's graduation probability above (and lowers their quit probability below) those of men or women apprentices in unilateral programs.     

To invest, or not to invest, in brands? Drivers of brand relevance in B2B markets

When allocating resources to brand investments, managers should consider the relevance of brands to the purchase decision process. Past research on consumer markets shows that brand relevance generally is driven by three functions: image benefits as well as information cost and risk reductions. This study is the first to investigate these underlying mechanisms of brand relevance in a business-to-business setting. Our main contribution is that, in contrast with consumer markets, brand relevance in industrial markets depends primarily on risk and information cost-reducing effects. Therefore, business-to-business firms should invest in their brands using tactics that support the reduction of risk and information search costs for customer decision making. This article also demonstrates that brand relevance differs across product categories, such that depending on the specific category, investing in brands may or may not be a promising strategy.