Equilibria on a circular market when consumers do not always buy from the closest firm

Review of Economic Design - We study spatial competition by firms which is often studied in the context of linear markets where customers always shop at the nearest firm. Here, customer behavior is...     

Was It Something I Ate? Implementation of the FDA Seafood HACCP Program

We develop a theoretical model of enforcement and compliance under HACCP regulation and use the FDA's seafood inspection records to examine: (1) if the FDA has targeted its inspections under HACCP regulation; (2) the effects of inspections on compliance with HACCP and plant sanitation standards; and (3) the relationship between compliance with HACCP and preexisting sanitation standards. There is some evidence of targeting based on product risk, but not on past compliance performance. The threat of an inspection increases the likelihood of compliance, but only for sanitation inspections, not for HACCP. HACCP compliance does not improve compliance with sanitation standards.     

Bright Pharmaceuticals SE: Accounting for a Business Combination under IFRS 3

This instructional resource familiarizes students with the accounting for business combinations under IFRS 3 and illustrates the uncertainty and professional judgment involved in asset valuation and consolidation. First, students need to assess the quality of information generated under IFRS 3 and fair value accounting. Second, they are asked to account for a business combination by identifying possible input parameters to measure several intangible assets and a contingent liability. Based on their valuation results, they compute the amount of goodwill recognized on the acquisition and assess the effects of their parameter choices on the values of different assets and liabilities. As an optional third task, the case asks students to consolidate the financial statements and evaluate the impact of the acquisition on the financial position of the acquirer.     

Managing the right tension

Of all the competing objectives every company faces, three pairs stand out: profitability versus growth, the short term versus the long term, and the whole organization versus the units. In each case, progress on one front usually comes at the expense of progress on the other. The authors researched the performance of more than 1000 companies worldwide over the past two decades and found that most struggle to succeed across the three tensions. From 1983 to 2003, for example, only 32% of these companies more often than not achieved positive profitability and revenue growth at the same time. The problem, the authors discovered, is not so much that managers don't recognize the tensions--those are all too familiar to anyone who has ever run a business. Rather, it is that managers frequently don't focus on the tension that matters most to their company. Even when they do identify the right tension, they usually make the mistake of prioritizing a "lead" objective within it-for example, profitability over growth. As a result, companies often end up moving first in this direction, then in that, and then back again, never quite resolving the tension. The companies that performed best adopted a very different approach. Instead of setting a lead objective, they looked at how best to strengthen what the two sides of each tension have in common: For profitability and growth,the common bond is customer benefit; for the short term and the long, it is sustainable earnings; and for the whole and its parts, it is particular organizational resources and capabilities. The authors describe how companies can select the right tension, what traps they may fall into when they focus on one side over the other, and how to escape these traps by managing to the bonds between objectives.     

Fear and the Fama‐French Factors

Investors’ expectations of market volatility, captured by the VIX (the Chicago Board Options Exchange's volatility index, also known as the “investor fear gauge”), affects the expected returns of US equities. Changes in the VIX drive variations in the expected returns of the factors included in the Fama and French three‐factor model augmented with a momentum factor. The market risk premium (R_m– R_f) and the value premium (HML) are especially sensitive to changes in the VIX. An increase in expected volatility is associated with flights to quality and increases in estimated required returns.     

Two-Tier Store Brands: The Benefic Impact of a Value Brand on Perceptions of a Premium Brand

A recent trend in the retail industry is the emergence of multi-tier store brands. In the current article, we contrast consumers’ expectations in a retailing context in which a single store brand is present to one in which two store brands are offered in the same category. We propose that when a retailer offers a single store brand, consumers expect it to be of lower quality even when it is described as a premium brand. On the other hand, quality perception of a premium store brand increases in the presence of a value store brand. Importantly, quality perceptions of a value store brand are not affected by the presence of a premium store brand. In two studies we find support for our hypotheses showing the benefic impact of a value store brand on quality perceptions of a premium store brand.     

The relationship of early life experiences to later life leisure involvement

Abstract

Data from the 1982–1983 Nationwide Recreation Survey were used to determine whether late life differences in leisure behavior reflect a response to early life patterns or present‐day socioeconomic differences. Individuals aged 65 and over were categorized as either “expanders”; or “contractors”; based on their pattern of leisure involvement. Differences in lifelong learning of leisure activities between these two groups were examined. In addition, a discriminant analysis was done to determine whether present‐day differences on socio‐demographic variables were effective in differentiating between expanders and contractors. Results showed that expanders altered their leisure patterns by the addition of new activities throughout the life span whereas contractors learned most of their outdoor recreation activities before age 21. However, none of the socio‐demographic variables used in this study were effective in differentiating between the expanders and contractors.     

Exploring Attitudes and Affiliation Intentions toward Consumers Who Engage in Socially Shared Superstitious Behaviors: A Study of Students in the East and the West

Existing literature on superstitious beliefs focuses on consumer purchasing behavior. However, little is known about how superstition‐based consumption behaviors are socially perceived. This paper investigates students’ attitudes toward consumers who engage in socially shared superstitious behaviors. Two studies show that students from Eastern and Western countries have negative attitudes and lower affiliation intentions toward consumers engaging in socially shared superstitious behaviors. As predicted by social judgment theory, this effect is driven by perceived low competence but not by perceived warmth. These negative attitudes and lower affiliation intentions are moderated by the student's superstitiousness. The managerial implications of social perceptions regarding consumer superstitious behavior are discussed.     

Encumbering harvest rights to protect marine environments: a model of marine conservation easements*

We adapt the concept of a conservation easement to a marine environment and explore its use to achieve conservation goals. Although marine environments generally are not owned, those who use them for commercial fishing often are regulated. These regulations grant harvesters rights to use marine environments in specified ways, and the possibility of encumbering these rights to achieve conservation goals creates a potential role for marine easements. We examine this potential under alternative fishery management regimes and find, generally, that marine easements tend to be most effective when harvest rights are delineated most fully. Our analysis suggests ways that marine easements can have flexibility and transactions cost advantages over other approaches to achieve marine conservation goals. We also propose ways in which the design of laws allowing marine easements should follow, or depart from, the design of laws authorising conservation easements on land.