The Economics of Sports,William S. Kern,editor.

Review of Industrial Organization -     

Deregulation,governance structures,and efficiency: the U.S. electric utility sector

The business strategy literature offers apparently opposite views of the ability of vertical integration to cope with the uncertainty related to changing regulatory environments. In this paper, we analyze how the process of retail deregulation affects the comparative efficiency of governance structures, which range on a continuum from fully vertically integrated structures to market transactions. Based on the analysis of 177 U.S. electric utilities from 1998 to 2001, our results show that the process of retail deregulation has a negative impact on firms' productive efficiency, as measured using Data Envelopment Analysis. Furthermore, firms that are vertically integrated into electricity generation, or that rely on the market for the supply of their electricity, are more efficient than firms that adopt hybrid structures combining vertical integration and contracting. This research has important implications because it shows the coexistence of different types of governance structures that cope efficiently with regulatory uncertainty through different mechanisms. Copyright © 2005 John Wiley & Sons, Ltd.     

Capital Investment and Amortization Policies in the U.S.S.R.

This article deals with the two major problems in depreciation: how to determine actual wear and tear and, thus, life of equipment; and how to treat depreciation and its associated expenses in the accounting records. With regard to the first, the author recognizes that a certain amount of arbitrary action is probably inevitable. Industry in the USSR is evidently bound by its own equivalent of “Bulletin F”, which sets “amortization norms” or depreciation allowances for each class of machinery; and it is found that these often do not correspond to actual operating experience. The machine may be scrapped either before its allocated life span, or survive fully depreciated. This fact is, of course, quite familiar, and the author has no suggestions to offer beyond pointing out the problem. He also questions, for technical reasons, the straight line method which is now generally used. Yet it is almost impossible to justify, on functional grounds, any regulated alternative method, such as declining balance or sum-of-the-years-digits.     

Economics, Competition, and Costs in the Resructuring of U.S. Electricity Markets

Many of the problems facing U.S. electricity markets stem from blatant disregard for the advice and warnings of economists who specialize in these markets. The short list of disregarded economic advice includes existing market power of some generators; transmission discrimination, lack of efficient pricing of transmission congestion; inefficient retail prices; anemic incentives to minimize costs; and lack of consumer choice and experience, occasionally coupled with high switching costs. As uncomfortable as the current state of electric power restructuring may be, going back to full regulation likely would be worse. There is reason to hope that less direct paths to increased competition will resolve some of the worst policy patches and half-reforms. These less direct paths to increased competition include expansion of the size of geographic markets, geographic expansion of transmission unbundling, reductions in obstacles to long-term supply contracting, growth of demand response programs, improvements in generator efficiency and availability, and expansion of real-time pricing and customized energy services for commercial and industrial customers. In aggregate, these constitute a promising “quiet phase” of electric power reform.     

Money for Nothing: Politicians,Rent Extraction,and Political Extortion. Fred S. McChesney.

Review of Industrial Organization -     

The effects of divestiture,privatization, and competition on productivity in U.S. and U.K. telecommunications

The telecommunications industries in the United States and the United Kingdom have undergone massive changes during the 1980s. This paper decomposes the total factor productivity growth of AT&T and British Telecom into their various components. It finds that while a great deal of the productivity increases apparently resulted from continuing scale economies, competition for AT&T and privatization of BT have been responsible for 17 percent and 25 percent of their respective gains in recent years. Among other variables, divestiture appears to have initially depressed AT&T's productivity growth, and competition for BT is too insignificant to yet have an impact.     

Entry timing,exploration, and firm survival in the early U.S. bicycle industry

We explore the relationship between a firm's entry timing and its probability of surviving the early, uncertain period of its industry, and consider the trade‐off between entering early and potentially establishing a strong position in the industry vs. waiting until technological uncertainty is reduced. We hypothesize that, owing to inertial forces, firms that enter the industry at the earliest point in its history are least likely to make the conversion to the product generation that becomes the dominant design in the industry. Exploration through the introduction of new products appears to reflect a local search process and retards the transition to the dominant design. We also hypothesize that, though firms entering early may exhibit longer life spans, their advantages are limited to the period before the emergence of the dominant design. We test our hypotheses in the early U.S. bicycle industry, and find evidence consistent with the idea that inertia limits firms' abilities to make the transition between generations of product configurations. Copyright © 2006 John Wiley & Sons, Ltd.     

Industry Structure,Segmentation, and Quality Competition in the U.S. Hotel Industry*

We examine how quality competition affects the relationship between market size and industry structure at the product level using evidence from the U.S. hotel industry. Starting in the early 1980s, quality competition for business travelers became more based on variable and less on fixed costs, and became less scale intensive. Since then, market size increases have been met by more, but smaller, hotels in business travel destinations but continued to be met by larger hotels in personal travel destinations. Our results illustrate how the way consumers benefit from increases in market size depends on how firms compete.     

Poverty,Legal Status,and Pay Basis: The Case of U.S. Agriculture

U.S. farmworkers primarily are paid either on a piecerate or on a timerate basis. This article studies relationships among wage contracts, legal status, and poverty using a representative survey of employed farmworkers, which includes detailed information on legal status, including whether a worker is illegal. Results indicate that while piecerate workers earn more per hour on average, they work fewer hours and face greater poverty risk than their timerate counterparts. Furthermore, foreign‐born workers, especially those who are undocumented, are overrepresented in piecerate positions, and analysis shows that the effect of piecerate pay on poverty is positive and correlated with being foreign‐born.     

Supplier relations and management: A survey of Japanese,Japanese-transplant,and U.S. auto plants

This article presents the results of a questionnaire survey sent to a sample of automobile manufacturers in the United States and Japan (including Japanese-managed plants in the United States) during the spring of 1990. The data support observations that Japanese and U.S. practices tend to differ in key areas and Japanese suppliers perform better in dimensions such as quality (defects) and prices (meeting targets, reducing prices over time); and that Japanese-managed auto plants established in the United States have, in general, adopted Japanese practices and receive extremely high levels of quality from Japanese as well as U.S. suppliers. These findings provide evidence that Japanese practices and performance levels are transferable outside Japan and suggest that considerable improvements are possible for U.S. suppliers supplying U.S. auto plants. In addition, the survey indicates that U.S. firms have adopted at least some practices traditionally associated with Japanese firms, apparently reflecting some convergence toward Japanese practices and higher performance levels in supplier management.     

美国墨西哥湾溢油事故应急响应、治理措施及其启示

2010年4月20日,美国墨西哥湾深水地平线号钻井平台发生爆炸导致溢油事故。事故发生后,美国启动了国家、区域和地方的各级应急指挥系统,统一协调各部门进行海上溢油的堵漏、治理与回收。由于各级政府和部门联合行动,协调配合,物资储备充足,布局合理,治理措施得当,大大减少了对环境的伤害。美国的海上溢油应急响应体系是依托1990年美国《石油污染法案》和1994年《溢油应急计划》建立的包括地方、区域和国家整体的应急指挥系统。美国的溢油应急指挥体系涉及16个政府部门,可随时按照国家应急计划和授权协调开展工作。对比中关两国海上溢油应急响应体系,中国的国家海上溢油应急指挥体系还不完善,建议加强溢油应急响应立法工作,明确职责与法律关系;建立国家溢油应急指挥体系,切实加强各部门之间的协作;完善中国石油企业的应急响应机制,应对未来可能发生的溢油事故。     

Profitability, productivity and price recovery patterns in the U.S. telecommunications industry

We undertake a study where we examine changes in the profitability, productivity and price recovery of firms in the U.S. telecommunications industry over a sixteen-year period. We assess the performance of thirty-three major companies in the local-exchange sector over six time periods 1975, 1978, 1981, 1984, 1987 and 1990, using a performance analysis model which disaggregates the profitability measure into two components: productivity and price recovery. We demonstrate the computation of performance using this technique. Our study indicates that the opening up of markets has had a significant impact on different dimensions of performance in the telecommunications industry, also validating a number of theoretical assumptions about the impact that industry changes are expected to have on firms.     

Power Structure – Ownership,Integration, and Competition in the U.S. Electric Utility Industry. John E. Kwoka,Jr.

Review of Industrial Organization -     

U.S. Multinational Activity Abroad and U.S. Jobs: Substitutes or Complements?

Critics of globalization claim that firms are being driven by the prospects of cheaper labor and lower labor standards to shift employment abroad. Yet the evidence, beyond anecdotes, is slim. This paper reports stylized facts on the activities of U.S. multinationals at home and abroad for the years 1977 to 1999. We focus on firms in manufacturing and services, two sectors that have received extensive media attention for supposedly exporting jobs. Using firm‐level data collected by the Bureau of Economic Analysis (BEA) in Washington, D.C., we report correlations between U.S. multinational employment at home and abroad. Preliminary evidence based on the operations of these multinationals suggests that the sign of the correlation depends on the crucial distinction between affiliates in high‐income and low‐income countries. For affiliates in high‐income countries there is a positive correlation between jobs at home and abroad, suggesting that foreign employment of U.S. multinationals is complementary to domestic employment. For firms that operate in developing countries, employment has been cut in the United States, and affiliate employment has increased. To account for firm size, substitution across firms and entry and exit, we aggregate our data to the industry level. This exercise reveals that the observed “complementarity” between U.S. and foreign jobs has been driven largely by a contraction across all manufacturing sectors. It also reveals that foreign employment in developing countries has substituted for U.S. employment in several highly visible industries, including computers, electronics, and transportation. The fact that there were U.S. jobs lost to foreign affiliates in key sectors, despite broad complementarity in hiring and firing decisions between U.S. parents and their affiliates, helps explain why economists view the impact of globalization on U.S. jobs as benign despite negative news coverage for declining industries.     

PROFITABILITY,TRANSACTIONAL ALIGNMENT,AND ORGANIZATIONAL MORTALITY IN THE U.S. TRUCKING INDUSTRY

The winds of creative destruction rarely blow more fiercely than in a newly deregulated environment. Managers simultaneously face a novel focus on operating efficiency and an onslaught of new competitors. What must managers do to enable their firms to survive in such an environment? What factors bear on firms’ survival? This paper presents an analysis of mortality of large motor carriers in the U.S. interstate for-hire trucking industry after deregulation. It examines this phenomenon through a multidisciplinary lens that encompasses organizational ecology, neoclassical economics, and transaction cost economics. The paper posits that carrier mortality is a function of both firm-level and industry-level attributes, which are drawn from both ecological and economic theories. While each of these theories separately informs motor carrier mortality, the inclusion of predictions derived from both disciplines in one model significantly increases explanatory power over either theory evaluated alone. The empirical analysis is among the first to show increased mortality when firms do not adhere to operating policies consistent with transaction cost minimization principles. In sum, managers are well advised to adopt a multidisciplinary approach to strategy to ensure their firms’ survival. © 1997 by John Wiley & Sons, Ltd.     

U.S. Foreign Production and Unions

Based on analysis of industry by region data the author finds little evidence that U.S. unions have been a significant factor in the decision of U.S. firms to produce abroad. In effect, the composition of U.S. foreign production does not appear to be drawn from U.S. industries with especially high domestic unionization. Corresponding with previous research, the research do indicate that monopoly power, foreign tariffs and barriers, and the size and distance of foreign markets and important determinants of U.S. foreign production.