Program of the 1995 Meeting of the Society for the Advancement of Economic Theory

Program of the 1995 Meeting of the Society for the Advancement of Economic Theory     

Industrial Companies' Evaluation Criteria in New Product Development Gates

This article presents the results of a study on the evaluation criteria that companies use at several gates in the NPD process. The findings from 166 managers suggest that companies use different criteria at different NPD evaluation gates. While such criteria as technical feasibility, intuition and market potential are stressed in the early‐screening gates of the NPD process, a focus on product performance, quality, and staying within the development budget are considered of paramount importance after the product has been developed. During and after commercialization, customer acceptance and satisfaction and unit sales are primary considerations. In addition, based on the performance dimensions developed by Griffin and Page (1993), we derive patterns of use of various evaluative dimensions at the NPD gates. Our results show that while the market acceptance dimension permeates evaluation at all the gates in the NPD process, the financial dimension is especially important during the business analysis gate and after‐market launch. The product performance dimension figures strongly in the product and market testing gates. The importance of our additional set of criteria (i.e., product uniqueness, market potential, market chance, technical feasibility, and intuition) decreases as the NPD process unfolds. Overall the above pattern of dimensions' usage holds true for both countries in which we collected our data, and across firms of different sizes, holding different market share positions, with different NPD drivers, following different innovation strategies, and developing different types of new products. The results also are stable for respondents that differ in terms of expertise and functional background. The results of this study provide useful guidelines for project selection and evaluation purposes and therefore can be helpful for effective investment decision‐making at gate‐meetings and for project portfolio management. We elaborate on these guidelines for product developers and marketers wishing to employ evaluation criteria in their NPD gates, and we discuss directions for further research.     

Identification and estimation in sequential,asymmetric, English auctions

Within the independent private-values paradigm, we derive the data-generating process of the winning bid for the last unit sold at multi-unit, sequential, asymmetric, English auctions. When the identity of the winner and the number of units won by each bidder in previous stages of the auction are observed, we demonstrate nonparametric identification and propose a semi-nonparametric estimation strategy based on orthogonal polynomials. We apply our estimator to daily data from fish auctions in Denmark. For single-unit supply, we use our estimates to compare the revenues a seller could expect to earn were a Dutch auction employed instead.     

STEINDL ON IMPERFECT COMPETITION: THE ROLE OF TECHNICAL CHANGE

Josef Steindl offers an innovative dynamic analysis of competition in Maturity and Stagnation in American Capitalism, with a key role for technical change. However, in his later writings he suggests that he had not gone far enough and that his account was not ‘sufficiently dynamic’, noting particularly his neglect of fundamental issues in technological development. Here, we critically examine the nature of technical change in Steindl’s analysis, pointing to ambiguities and contradictions that arise. Standard characterizations of the nature of technical change are then introduced and used to further integrate technical change into Steindl’s analysis of competition.     

On the regulation of technology: Examining the linear model

The kind, magnitude and distribution of the risks borne by industrialized societies are determined by regulations and the effectiveness of their implementation and enforcement. The authors examine the paradox that the quantified, ‘hard’ risk estimates which provide the scientific basis for the linear model of regulation are, in fact, unrealistic because they are unable to deal with human and organizational influences on regulatory processes. The principal elements of regulation are discussed and placed in a more comprehensive and realistic perspective.     

Sensitivity Analysis And Schemes Of Arrangement

Formal mathematical techniques are being used increasingly as aids to commercial decision-making. We propose that those deciding whether to liquidate or trade-out should, as a matter of course, have sufficient information to enable sensitivity analysis on any forecast returns. Sensitivity analyses are notably lacking in documentation used for predicting the outcomes of schemes of arrangement such as the complex Estate Mortgage Trusts (EMT) moratorium on the withdrawal of funds by unitholders. This article details the outcomes of some schemes of arrangement in Australia in the 1960s and 1970s and discusses the EMT moratorium. The moratorium procedures provide the setting and data for simulations and sensitivity analyses. Coupled with the evidence provided by Dean (1977, 1983) and Aitken (1981), this suggests a need for information on the expected timing of payouts to enable sensitivity analysis whenever a scheme involves delayed distributions.     

THE SUPPLY OF NON-DEGRADED AGRICULTURAL LAND*

Profitability increases because of favourable product or factor price changes provide incentives for profit-maximising farmers, who use soils in conjunction with other cooperant inputs, to increase their investment in the preservation of soil-quality, whenever there exist economically viable technologies for preserving soils. However, when such technologies do not exist, regardless of whether farmers utilise soils as non-renewable or renewable resources, such profitability increases are associated with a long-run deterioration in soil quality.