Injury-Based Protection with Auditing under Imperfect Information

We analyze optimal protection when a benevolent government must maintain nonnegative domestic profits and when the domestic import-competing firm has private information about its costs. A costly audit mechanism can deter strategic manipulation of this private information. We show that a high penalty/low probability of investigation is optimal when the shadow price of the firm profit is low compared with the audit cost. A low penalty/high probability of investigation is optimal when there is a low investigation cost and a high shadow price of firm profit. In this latter case, the trade authority obtains truthful announcements by directly auditing the firm.     

Voluntary Disclosures When There Is an Option to Delay Disclosure

What incentives drive managers to disclose immediately when they have an option to delay disclosures? I examine this question in a two-period setting in which public news that is positively correlated with firm value arrives periodically. I show that, when the manager's likelihood of receiving information is independent of the public news, an informed manager is more likely to disclose immediately when the public news is good. This happens even as the disclosure threshold itself increases in the public news. My model provides a potential explanation for why managers have a higher propensity to provide earnings forecasts when current earnings are high. I also show that, even when disclosures are credible, the average price reaction to a voluntary disclosure is (i) decreasing in the magnitude of the public news and (ii) lower when the manager is more myopic. These results have potential implications for studies that use stock returns to measure the news contained in management disclosures.     

Impact of Competition and Taxes on Responsibility Center Organization and Transfer Prices*

We show that a firm can use its decentralized organizational structure and transfer price as commitment devices to obtain strategic advantage in the product market only when there are nonstrategic reasons to decentralize and to distort transfer prices away from marginal costs, such as the sales office's local knowledge about market conditions and the presence of tax rate differentials across the two tax jurisdictions. Surprisingly, an increase in the sales office's tax rates may help a firm increase overall profits. An increase in the sales office's tax rates causes the firm to increase its transfer price, which in turn dampens the sales office's competition and may more than offset the effect of increased tax rates on the firm's overall profits.     

Discriminatory Procurement Policy with Cash Limits

This paper presents a counterexample to the Miyagiwa ((1991) American Economic Review 81, 1320–1328) claim that discriminatory government procurement policy is ineffective as a protectionist device, when the goods are also consumed by the private sector. The procurement sector is a homogeneous product Cournot–Nash duopoly, with a home and a foreign firm. The procurement policy takes the form of an ad valorem premium over the import price. If both the firms play the output game in strategic complements, procurement policy can lower imports. This possibility arises when the product demand is unit elastic, corresponding to cash limits to public expenditure, and providing the home firm is smaller than the foreign firm. By adding a competitive export sector, the paper also derives sufficient conditions for macroeconomic coordination failures to occur.     

Determinants of premiums paid in bank acquisitions

Summary and Conclusions Mergers are a relatively observable form of business behavior and reflect a major business decision. As such, mergers provide an attractive opportunity for empirical investigation into business behavior, which may shed light on business motivation. This study tests for the determinants of premiums paid in 1,835 of the 2,717 bank mergers and acquisitions that occurred from 1973–83.The only variables that are often statistically significant and carry consistent sights are: (1) growth of the target firm; (2) growth of the target market; and (3) the capital-to-assets ratio of the target firm. The signs on these variables suggest that high growth of the target firm and its market and a low capital-to-assets ratio are particularly attractive to bank managers, for which they are willing to pay a premium. Variables which provide a relatively direct indication of profit opportunities are often not statistically significant or carry mixed signs.Overall, the results suggest that, among the set of banks that are actually acquired, growth of the target bank and its market will induce bank managers to pay a premium but profits of the target do not elicit a premium.The views expressed herein are the author's and do not necessarily reflect the views of the Board or its staff.     

Brand familiarity and product knowledge in customization

I adopt Hotelling's model with two firms. Each consumer has a most preferred variety and possesses a certain level of category‐specific knowledge. When a firm offers customization, consumers must interact with the firm to create their products. Consumers familiar with the brand can do this seamlessly, whereas consumers unfamiliar with the brand have difficulty expressing their individual needs (the difficulty decreases with consumers' knowledge). The firms first simultaneously decide whether to customize, then engage in price competition. Although customization makes the products less differentiated, the frictions caused by consumer co‐design activities relax price competition. Customization by one of the firms occurs in equilibrium.     

Two-Part Pricing with Costly Arbitrage

This paper considers the optimal two-part pricing strategy of a monopolist whose customers collude when they purchase the firm's product. In contrast to the sentiment in the existing price discrimination literature, I find that a monopolist's profit can actually increase when consumers share its good. When transaction costs for collusion are zero the firm can extract the full consumer surplus through two-part prices. When transaction costs are positive or there are a substantial number of consumers without access to resale, the firm may be hurt by arbitrage.     

卖空限制对中国权证价格的影响

论文利用中国市场上特有的不允许卖空股票的制度,来实证检验“限制对j中”风险对于权证定价的影响。研究将中国权证市场的定价偏离分解为流动性溢价和动量性溢价（折价）。其中动量性溢价（折价）是市场泡沫的一种体现。研究爱现在权证泡沫出现期间,权证的换手率增高。另外,如果允许卖空,投资者将可以通过套利获取无风险收益。     

Open Source Software: Competition with A Public Good

This paper looks at price and quality competition in software markets under two different forms of competition—one where two proprietary firms first choose quality and then engage in price competition, and second where a proprietary firm faces competition from an open source software (OSS) firm that allows its users to determine quality level and provides the software at zero price. We find that OSS competition never improves quality for consumers who value quality highly. However, it may provide greater quality to users with a low valuation for quality. In addition, we find that although OSS has a zero market price, the public good nature of OSS competition can lessen price competition, making the proprietary firm better-off with increased profit but leaving consumers worse-off with lower surplus.     

IPO relative difficulty,M&A option and size effect

Size effect in the Chinese stock market is huge from 2012 to 2017. We empirically identify a driving force behind the effect: M&A option caused by IPO and M&A policies changes. We show that the M&A frequency increases and the acquirers' market value deceases as the IPO relative difficulty rises, small firm premium is positively related to both IPO relative difficulty and M&A frequency, and among the listed firms that have stronger tendency to merge or acquire a private firm, size effect is significantly larger. These results hold when controlling reverse merger probability. In sum, we reveal a new mechanism: Compared with a large public firm, a small one is more likely to acquire a private firm with discount since both the acquired and the acquirer benefit more, so the stock price of a small firm contains a larger part of M&A option. This option value increases as IPO relative difficulty rises.     

Waiting for Signaling Quality

When a durable good of uncertain quality is introduced to the market, some consumers strategically delay their buying until the next period, with the hope of learning the unknown quality. I analyze the monopolist's pricing and waiting strategies when consumers have strategic delay incentives. I show when the monopolist offers introductory low prices in pooling equilibria. I also find two types of separating equilibria: one where the high‐type monopolist signals its quality by choosing a different price than the low‐type monopolist in the first period and another where the high‐type monopolist announces the product in the first period and waits to sell only in the second period. Waiting creates a credible cost for signaling; hence, the monopolist uses it as a signaling device.     

Endogenous Price Leadership and the Strategic Acquisition of Information

We model a differentiated Bertrand duopoly in which a firm's earlier knowledge of market demand than its competitor results in endogenous price leadership with the information advantaged firm leading. In such a setting with second‐mover advantage, we then study the firms’ incentives to acquire information and analyze an information acquisition game. Both (i) neither firm acquiring information and (ii) one firm acquiring information can arise as subgame perfect equilibrium, but both firms acquiring information is never an equilibrium outcome, even if information is free. Information may have a negative value if it causes a change in the timing of price competition.     

信息披露是否有利于公共品的合作供给？

本文在标准线性公共品博弈的基础上引入了环境不确定性，对信息披露在公共品合作供给当中的作用进行了研究，以解决以往信息披露研究中信息反馈区分度不够的问题。实验的结果显示信息披露无法改进公共品的合作供给这一结论是较为稳健的。实验的结果还表明，人们对组织中其他成员合作行为的乐观性具有一定的现实基础，而对环境的乐观性则纯粹是一种盲目的乐观。     

Private Goods,Public Goods,and Common Pools with Homo Reciprocans

Familiar inefficiencies arise with competing interests over private goods in Stackelberg and investment games. Private good experiments reveal whether reciprocity enhances cooperative outcomes. Familiar social dilemmas arise with voluntary provision of public goods and voluntary appropriation from common pools. Experiments with pairs of payoff‐equivalent provision and appropriation games reveal whether reciprocity is more or less effective in ameliorating under‐provision or over‐appropriation. Experiments with asymmetric provision and appropriation games also yield insight into the effects of the Indian caste system on inefficiency from social dilemmas. Experiments with three types of games, with a private good, public good or common pool, provide diagnostic tests of the homo reciprocans model.     

EXPLOITING AN ADVANTAGE--DECLINING AN ADVANTAGE

Within the context of the study, a firm is said to have an advantageover another if it obtains more customers given they both chargethe same price. Further, consumer switching costs imply thelarger the difference in the prices charged by the two firmsthe greater the proportion of consumers who switch from thehigher-priced firm to the lower-priced one. The Nash equilibriumto the price-posting game is characterized The firm with theadvantage charges a higher price Finally, it is shown that ifone firm can freely choose to have an advantage, it will rejectit. This follows as the greater the advantage, the smaller theequilibrium profits to both firms.     

EQUIVALENCE OF COMPETITION MODE IN A VERTICALLY DIFFERENTIATED DUOPOLY WITH DELEGATION

This paper aims to examine the equivalence of competition mode in a vertically differentiated product market with the relative performance delegation. It demonstrates the equivalence of product quality and social welfare in this delegation game, irrespective of modes of product competition. In addition, in a three‐stage game of quality‐delegation‐quantity (or price), it shows that the delegation coefficient is different between high‐quality and low‐quality firms in an asymmetric vertical differentiated model, and a high‐quality firm makes better use of the delegation than a low‐quality firm.     

The optimum size of the labor-managed firm

Ward's [1958] main result is that an increase in the output price of the labor-managed firm (LMF) decreases its output and members. However, Ward and his followers have not addressed two important elements: the benefit of sharing a public good among LMF members and the increased coordination costs among these members. This paper incorporates these elements to derive the LMF's optimal size and suggests conditions which may alter Ward's perverse result. The example of the Israeli Kibbutzim concerning both incorporating the public goods as well as coordination costs serves as a motivation to the model developed in this paper.     

Why is the Labor Share so Low in Turkey?

The labor share in the income of Turkey is confoundingly low according to official figures. By comparison, the average labor share of OECD members is two times higher than that of Turkey. Is this because labor productivity is low, or is it because imperfect competition, which amplifies profits, is overwhelmingly high in Turkey? We estimate preferences, technology parameters, and price markup in a dynamic general equilibrium model to answer this question using GMM. To our surprise, the results suggest that the crucial factor suppressing the share of labor in Turkey is high price markup, and the role of low productivity of labor is negligible. The results are robust to the use of different instrumental variables.     

Mixed duopoly,location choice,and shadow cost of public funds

We examine the relationship between equilibrium and efficient levels of product differentiation in a mixed duopoly, where a welfare‐maximizing public enterprise competes with a profit‐maximizing private firm. We introduce shadow costs of public funding (i.e., the excess burden of taxation). The profits of public firms obtained by the government reduce these costs. We find that in a mixed duopoly, the level of product differentiation is too low for social welfare. This result is in sharp contrast to the private oligopoly, where the level of product differentiation is too high. Finally, we show that when the shadow cost is high, privatizing the public enterprise improves welfare.     

Regulating the Anticommons: Insights from Public‐Expenditure Theory

This article offers a new interpretation of the traditional Cournot complements problem, or anticommons, by using the theory of public goods to gain a perspective on the problem. Specifically, I examine the pricing strategies and regulation of multiple monopolies that produce products which consumers view as perfect complements. I show that collusion by the firms increases total social welfare and that the collusion problem can be reinterpreted as a problem of provision of public goods from the point of view of the firms. I take this insight further and derive the familiar concepts of the Samuelson marginal condition and the ratio equilibrium for the firms. I compare these outcomes to the first best solution and then apply incentive‐compatible mechanisms to strategically implement the Pareto superior ratio‐equilibrium outcome and the optimal marginal‐cost pricing outcome. Finally, I show how this methodology can be applied to the more familiar Cournot model of oligopoly.