Effects of family control on the degree and type of diversification: Empirical evidence for business groups

This article analyzes the impact of ownership structure on corporate diversification, with reference to large listed family business groups. By considering agency theory and socioemotional wealth, the study examines the relationship between family ownership, concentration of ownership, and degree and type of diversification. The study considers 99 Spanish listed business groups (50 family‐controlled‐ and 49 nonfamily‐controlled groups) and considers diversification of business group as the focus of analysis. The results show how family business groups present a lower preference for unrelated diversification than related diversification. There is also a nonlinear relationship between the concentration of ownership in family groups and the degree of diversification, showing different behaviors in family groups according to shares owned by the family's leading shareholders. This article contributes to the literature by providing a more precise identification of the corporate strategy adopted by business groups and establishing new evidence about the impact of family control on diversification strategies and the differences regarding nonfamily business groups.     

Obtaining Management Profiles of Ontario Swine Producers Through Cluster Analysis

This paper develops managerial profiles of Ontario Swine Producers for extension use, using mail survey data and cluster analysis. Results indicate that there are four major discriminant variables which can be used to identify different classes of farmers. These management profiles can be used for targeted extension efforts.     

Paying for the hydrological services of Mexico's forests: Analysis, negotiations and results

Mexico faces both high deforestation and severe water scarcity. The Payment for Hydrological Environmental Services (PSAH) Program was designed to complement other policy responses to the crisis at the interface of these problems. Through the PSAH, the Mexican federal government pays participating forest owners for the benefits of watershed protection and aquifer recharge in areas where commercial forestry is not currently competitive. Funding comes from fees charged to water users, from which nearly US$18 million are earmarked for payments of environmental services. Applicants are selected according to several criteria that include indicators of the value of water scarcity in the region. This paper describes the process of policy design of the PSAH, the main actors involved in the program, its operating rules, and provides a preliminary evaluation. One of the main findings is that many of the program's payments have been in areas with low deforestation risk. Selection criteria need to be modified to better target the areas where benefits to water users are highest and behavior modification has the least cost, otherwise the program main gains will be distributive, but without bringing a Pareto improvement in overall welfare.     

Supporting weakly Pareto optimal allocations in infinite dimensional nonconvex economies

In this paper, we prove a new version of the Second Welfare Theorem for economies with a finite number of agents and an infinite number of commodities, when the preference correspondences are not convex-valued and/or when the total production set is not convex. For this kind of nonconvex economies, a recent result, obtained by one of the authors, introduces conditions which, when applied to the convex case, give for Banach commodity spaces the well-known result of decentralization by continuous prices of Pareto-optimal allocations under an interiority condition. In this paper, in order to prove a different version of the Second Welfare Theorem, we reinforce the conditions on the commodity space, assumed here to be a Banach lattice, and introduce a nonconvex version of the properness assumptions on preferences and the total production set. Applied to the convex case, our result becomes the usual Second Welfare Theorem when properness assumptions replace the interiority condition. The proof uses a Hahn-Banach Theorem generalization by Borwein and Jofré (in Joper Res Appl Math 48:169–180, 1997) which allows to separate nonconvex sets in general Banach spacesThis work was partially supported by Nucleo Complex Engineering System. The successive versions of the paper were partly prepared during visits of Alejandro Jofré to CERMSEM and of Monique Florenzano and Pascal Gourdel to the Centro de Modelamiento Matematico. The hospitality of both institutions and the support of the french Coopération régionale Cone Sud are gratefully aknowledged. The authors thank Ali Khan for stimulating exchange of ideas and literature, Roko Aliprantis, Jean-Marc Bonnisseau, Alain Chateauneuf, Roger Guesnerie, Filipe Martins Da Rocha, Moncef Meddeb, B. Mordukovich, Lionel Thibault and Rabee Tourky for valuable discussions     

Dollar-denominated accounts in Latin America during the 1990s

In this paper we analyze the evolution of dollar-denominated accounts in Latin America, and how they impact the stability of the banking system and the volatility of macroeconomic aggregates. Our findings reveal that dollar deposits are strongly influenced by depreciation expectations of the local currency even in an environment of fairly low inflation. We also find that having more dollar accounts increases the probability of future crises if the economy is already in a crisis. Finally, our findings suggest that for some macroeconomic aggregates there exists a positive correlation, in the long and short run, between their volatility and the volume of dollar-denominated accounts in the banking system. The views expressed in this paper do not necessarily reflect the views of the Sociedad Hipoetcaria Federal de Mexico. The authors would like to thank Bruce Smith, Scott Freeman, Alex Minicozzi, Li Gan, Subal Kumbhakar, Gil Mehrez, Maria Soledad Martinez-Peria, Keisuke Hirano, the participants of the University of Mississippi, Barcelona, and Texas at Austin seminar series and an anonymous referee for useful comments. The authors would like to dedicate this paper to the memory of Bruce Smith.     

Public inputs and dynamic producer behavior: endogenous growth in U.S. agriculture

This paper is an attempt to understand the impact of public R&D and public infrastructure on the performance of the U.S. agricultural sector during the last part of the twentieth century. A neoclassical Solow growth model is not sufficient for this understanding given the sustained growth performance of the sector. We base our analysis on a well-known endogenous growth model, the ‘AK model’ where non-convexities are introduced through non-rival inputs. Based on these models and within the dynamic models that rationalize private and public decision making, we have identified three testable hypotheses regarding the aggregate agricultural production technology. They are: (1) increasing returns to scale over all inputs; (2) positive effect of additional units of public inputs on the long-run demand for private capital; and (3) negative impact of public inputs on cost. They are tested using two estimation procedures on two data sets for U.S. agriculture. One, covering the period 1948–1994, developed by USDA, the other, covering the period 1926–1990, from Thirtle et al. Maximum likelihood estimates do not conform to the regularity and behavioral properties of the economic model rendering them unusable for testing these hypotheses. Bayesian estimates, although not totally satisfactory, do not reject the hypotheses after prior imposition of some of the regularity conditions. This supports the notion of an important role for public inputs on the rapid and sustained growth of the sector. We calculate that, on average, one additional dollar spent on public R&D stock reduces private cost by $6.5, implying a return on these public expenses of 190%.

Negotiation Based on Fuzzy Logic and Knowledge Engineering: Some Case Studies

One of the most recent mathematical models for negotiation is the Compensatory Negotiation Solution by Knowledge Engineering (CNSKE). In this model a logic system called Compensatory Fuzzy Logic was used, which is more adequate to solve problems of decision making than the classical one probabilistic fuzzy logic system. The idempotency axiom of this system and the continuity of the operators allow the truth-values of the membership function to have a cardinal and not exclusively ordinal semantic meaning. On the other hand, continuity also makes ‘sensible’ the truth-values of the predicates. The aim of this paper is to illustrate the advantages of the CNSKE over other approaches in Game Theory. To show these advantages, some case studies are analyzed, consisting on the solution of three problems in which CNSKE is applied in economic and politic cases of negotiation, and compared with other alternative approaches.