Policy Issues Raised by For-Profit Spinoffs from Professional Associations: An Evaluation of a Recent AICPA Initiative

This paper provides an evaluation of the spinoff of a for-profit company from the American Institute of Certified Public Accountants (AICPA), a nonprofit professional association. The evaluation is based on a review of the literature on public policy issues surrounding organizational conversions from nonprofit to for-profit legal status. Many criticisms of this for-profit spinoff were voiced by professional leaders and accounting regulators, and we demonstrate that these criticisms are grounded in widely recognized policy principles relating to nonprofit conversions. The public policy issues raised by this study have implications for the governance of professional associations in all disciplines.     

The welfare costs of monopoly are larger than you think

We show that monopoly is the parent of monopsony when an industry employs specialized resources. This means that the welfare loss from monopoly and monopolization is larger than commonly portrayed. Copyright © 2010 John Wiley & Sons, Ltd.     

Rapid growth and changing economic structure: The expenditure side story and its implications for China

The purpose of this essay has not been to provide China with a detailed list of all of the things that the country must do to maintain a high growth rate. The purpose of this essay instead has been to analyze some of the most basic choices that China must make going forward, choices that are not yet fully understood either by government or private analysts. China has a very unusual economic structure at least on the aggregate demand side and that creates special challenges that other countries have not had to face to the same degree. How well China handles these challenges will determine whether it will continue to progress rapidly to middle income status and beyond.     

The Application of Monoline Insurance Principles to the Reregulation of Investment Banks and the GSEs

This article explores the benefits of reregulating the investment banks and government-sponsored enterprises (GSEs, namely, Fannie Mae and Freddie Mac) by applying the monoline principle that has been long established in regulating insurers that offer coverage against mortgage and bond default risks. The monoline regulatory principle was created to ensure that losses on a risky insurance line would not endanger other safe lines. The principle is applicable to both investment banks and the GSEs because both sets of institutions have operated with two basic divisions: a hedge fund division that maintained a highly risky investment portfolio and an infrastructure division that carried out activities with high direct value for the overall financial or mortgage markets. The monoline principle involves placing the two divisions in a new regulatory structure whereby the infrastructure division is bankruptcy remote from any losses that might occur within the hedge fund division.     

How the Client Effect Moderates Price Competition

Why is unregulated competition supposed to drive price down to ruinous levels in some high fixed-cost-low marginal-cost industries (e.g., railroads) but not in others (e.g., hotels)? We argue that price competition is moderated in high fixed-cost-low marginal-cost industries when the value one consumer realizes from the service is affected by the characterics of other consumers. We develop a simple model of this client effect using the example of the demand for hotels and then generalize the implications of our model to other industries.     

The impact of individual and managerial factors on salespeople's contribution to marketing intelligence activities

Although salespersons represent a unique and important channel of information, few of them contribute efficiently to marketing intelligence. This research aims to understand how salespeople's motivation and effort to gather and transmit marketing intelligence to management may be influenced by individual (organizational commitment, desire for upward mobility) and managerial (control system, participation in decision making, feedback, recognition) factors. The test of the proposed model shows that desire for upward mobility is the only individual determinant of behavior. Other than participation in decision making, all the managerial factors play influential roles in structuring both motivation and behavioral effort toward marketing intelligence by salespeople. The authors also discuss the limits of the model, some managerial implications, and future research opportunities.