Firm size distributions in an industry with constrained resources

We propose an equilibrium model for firm size distribution in an industry with a constrained essential input. The model applies when the population of firms is small and homogeneous and the supply of the necessary input factor is perfectly inelastic. We argue that although the Gibrat assumption obtains, this does not result in the lognormal distribution because of the entries, exits and mergers of firms competing for the inelastic essential resource. Using our own 32-year database of firms, we test the broken-stick, or random-ordered-interval, model that we call the Whitworth distribution, successfully applied by others to a number of data sets, including the abundances of bird species. We propose the Whitworth as the basic model of the equilibrium distribution of firm sizes for such supply-constrained industries, and find it fits our 31-year database best.     

Elasticity of demand,price and time: lessons from South Africa's plastic-bag levy

Policy makers in many countries have perceived plastic-bag litter as a problem, and have used a variety of regulatory tools to address it. South Africa's current legislation on plastic-bags came into effect on 7 May 2003. It increased the thickness of the plastic used, charged a small levy and required that bags be sold rather than distributed gratis. These regulations sharply reduced consumption of plastic bags in the short term, but unlike the Irish and Danish levies have failed to curb their use meaningfully in the long run. It is suggested that the initial sharp fall in use of bags was a result of loss aversion rooted in an endowment effect (the bags having long been a free good). Once consumers became accustomed to paying for bags, demand slowly rose to its historic levels.     

The Prodigal Corporation: an Analysis on the Effectiveness of the ACCC's Immunity Policy for Cartel Conduct

We examine the impact of the ACCC's leniency policy (Immunity Policy) on cartel stability. The policy, by reducing the fines of the first cartel members who cooperate with competition authorities, can act to deter collusion. However, we find that care is needed in how a leniency policy is implemented. It is possible that the leniency policy can make collusion easier to sustain than in its absence. Further, the ACCC's Cooperation Policy, which applies to all parties who assist the Commission with an investigation, can act to undermine the effectiveness of the leniency policy.     

Is the economics of time and ignorance a “classic”?

A history of economic thought perspective on The Economics of Time and Ignorance reveals that the book rehabilitates some major themes in the Austrian tradition that were all but lost subsequent to the formalist revolution in economics that took place in the middle of the twentieth-century. The book also anticipates some important ideas that were extended and applied in Austrian economics after it was first published. Reviews have claimed that the book was a “classic” and also “original”. The book is too close in a temporal sense to judge whether or not future generations will canonize it as a “classic”. Using Stigler’s criteria as to what constitutes scientific “originality”, it is concluded that, taken as a whole, the book was not original. From the vantage point of the overall discipline of economics, it was a work advancing controversial ideas that would not easily change the beliefs, practices and interests of economists in general but it offered sound reasons for taking the Austrian thought-trajectory more seriously. It would be more fitting to view the authors as providers of many innovations contributing to the mature Austrian economics of the twenty-first century.     

Interactive planning for strategy development in academic-based cooperative research enterprises

The evolution of strategic management concludes that formulation and implementation is an emergent process. In today's knowledge-based society this requires that managers develop more creative ways to align strategies with core competencies to maximise organisational performance and efficiencies. This paper evaluates the approach taken by a university-based research collaborative to illustrate an integrated planning process that supports strategic management in higher education environments. Utilising the concepts of road mapping and interactive planning, this case study provides insights into the participative approach used and provides a modification of several conceptual models to illustrate the advantages and disadvantages of this process.     

An Integrative Model of the New Product Development Process

Previous studies of new product development have identified a series of variables that are important determinants of new product success. The goal of this article is to demonstrate the nature of the complex interrelationships that exist among these variables. Roger Calantone and Anthony di Benedetto propose an integrative model of the new product decision process. They examine data gathered from a sample of industrial manufacturing companies and test their model empirically using three-stage least squares analysis. The article concludes with a discussion of implications for new product managers.     

Government Underpricing of Share‐Issue Privatizations

Abstract *** :  The purposes of the paper are to determine whether governments underprice shares in fixed‐price share‐issue privatizations (SIPs) and, if so, what their motivations are for doing so. This paper develops three models of SIP underpricing: one based on revenue goals, one based on political goals and an inclusive model which supposes that the level of underpricing depends on both government revenue goals and political goals. These models are estimated using an international sample of 104 SIPs from 25 countries. We find that, on average, SIPs are underpriced by approximately the same amount as private sector initial public offerings (IPOs). This is not consistent with the sole goal of revenue maximization because SIPs should not require the same degree of underpricing as IPOs. The inclusive regression fits the data well and indicates that both revenue and political goals affect the level of SIP underpricing .     

Infrastructure, Geographical Disadvantage, Transport Costs, and Trade

The authors use different data sets to investigate the dependenceof transport costs on geography and infrastructure. Infrastructureis an important determinant of transport costs, especially forlandlocked countries. Analysis of bilateral trade data confirmsthe importance of infrastructure and gives an estimate of theelasticity of trade flows with respect to the trade cost factorof around –3. A deterioration of infrastructure from themedian to the 75th percentile raises transport costs by 12 percentagepoints and reduces trade volumes by 28 percent. Analysis ofAfrican trade flows indicates that their relatively low levelis largely due to poor infrastructure.