Entry may increase network providers’ profit

In this paper the incentives for platform sponsors to open up their networks for independent rivals is analyzed. It is shown that open access may increase the platform sponsors’ profit levels and enhance quality improving investments. In addition, it is shown that a commitment to allow entry reduces the difference between ex ante and ex post compatibility incentives.     

Entrepreneurial innovativeness and growth ambitions in thick vs. thin regional innovation systems

Research in economic geography has paid increasing attention to regional innovation systems (RISs) as a potential vehicle for growth and development. Yet despite an increasing amount of research studying RISs in particular and economic regions in general, we have limited knowledge about their influence on entrepreneurs and entrepreneurship. We respond to this knowledge gap and study if entrepreneurs’ localization in thick vs. thin RISs affects their innovativeness and growth ambitions. Thick RISs are predominately urbanized spaces that include organizations of higher-level education, R&D intensive milieus, and an ample industry sector, while thin RISs to a lesser degree encompass these features. Empirically, we analyse 870–917 entrepreneurial firms in Agder of Southern Norway. Based on trade and labour markets, as defined by the EU’s classification of local administrative units (LAU1), we identify two thick and six thin RISs in Agder. Econometric analyses show that entrepreneurs located in thick RISs are more innovative than entrepreneurs located in thin RISs, but there are no significant differences concerning entrepreneurs’ growth ambitions. In light of our findings, we discuss the potential agency role played by entrepreneurial firms at a micro level on path dependent features of RISs at a macro level.     

Strategic Regulation Policy in the Internet

Some countries are importers while others are exporters of global backbone connectivity. At the same time, input components such as local access are non-traded. This paper analyzes a non-cooperative regulatory game between importing and exporting countries, assuming that the prices of both traded and non-traded inputs can be regulated. We show that exporting countries choose a more restrictive regulation of non-traded goods than importing countries do. We further show that a requirement of international non-discrimination may hurt importing countries, and give firms producing traded inputs incentives to invest in quality degradation.     

Endogenous Growth and Trade Liberalization Between Small and Large Countries

The paper combines insight from new trade theory and R&D-based endogenous growth models to argue that there are ambiguous growth effects of trade liberalization between countries that differ in terms of the size of their home markets. In particular, trade liberalization may reduce R&D incentives in countries with low purchasing power without invoking parallel increases in countries with high purchasing power. The paper also considers the case of imperfect international knowledge spillovers, and demonstrates that complete trade liberalization may affect the growth rate negatively.     

Access to finance,working capital management and company value: Evidences from Brazilian companies listed on BM&FBOVESPA

In this research, we have analyzed the impact of financial leverage on the relationship between working capital and company value and how financial constraints on access to financing affect this relationship. In addition, we have analyzed the relationship between working capital and company value. Using a sample of Brazilian public companies listed on BM&FBOVESPA from 1995 through 2009, we found evidence for the following conclusions: an extra Real (R$) of investment in working capital is significantly less worth, on average, than an extra Real (R$) of investment in cash; and, on average, increasing the level of working capital at the beginning of a fiscal year reduces company value.     

The importance of consumer multihoming (joint purchases) for market performance: Mergers and entry in media markets

Consumer “multihoming” (watching two TV channels, or buying two news magazines) has surprisingly important effects on market equilibrium and performance in (two‐sided) media markets. We show this by introducing consumer multihoming and advertising finance into the classic circle model of product differentiation. When consumers multihome (attend more than one platform), media platforms can charge only incremental value prices to advertisers. Entry or merger leaves consumer prices unchanged under consumer multihoming, but leaves advertiser prices unchanged under single‐homing: Multihoming flips the side of the market on which platforms compete. In contrast to standard circle results, equilibrium product variety can be insufficient under multihoming.     

Access Pricing,Quality Degradation,and Foreclosure in the Internet

Access to both a local and a global network is needed in order to get complete connection to the Internet. The purpose of this article is to examine the interplay between those two networks and how it affects the domestic public policy towards a domestic provider of local access. We find that a cost-oriented regulation is detrimental to domestic welfare, because it shifts profit to the foreign provider of global access. The optimal policy is that the regulator commits itself to set an access price above costs, possibly the same price as in an unregulated market economy. A regulation of the global access price has a non-monotonic effect on domestic welfare, and there is a potential conflict between international and domestic regulation policy.     

The remuneration of CEOs and corporate financial performance in Norway

Economics and management literatures advocate that senior company executives should be remunerated on the basis of the financial performance of the firms they manage. This helps align the interests of management with those of stockholders. There are, however, problems in implementing pay for performance schemes and these, along with other factors, may lead to there being no empirical relationship between compensation and stockholder returns. This study set out to explore the determinants of chief executive compensation in Norwegian stock exchange listed firms. To date there have been very few studies on this topic using data from Norway; most previous research has employed American data. The results show a positive relationship between CEO pay and corporate size but there was no significant association between remuneration and corporate financial performance as measured by accounting profitability and as measured by stock returns. Estimates of the value added by companies were significantly related to chief executive pay. There was also a positive and significant relationship between a CEO's compensation and the average wage level of the company. This association may be due to the unique characteristics of Norway's social and economic structure.     

Shipping the Good Horses Out

The 1964 effect states that when a fixed per‐unit cost is added to two substitutes, the more expensive (higher quality) one becomes relatively cheaper, and, thus, its consumption will increase. When applied to trade in vertically‐differentiated goods, the importing regions demand relatively more high‐quality goods. We examine how this result changes when the importing region is also endowed with the goods. We use a vertically‐differentiated goods model with heterogeneous consumers in which prices are endogenously determined. We show that the importing regions with an endowment have a stronger Alchian‐Allen effect than the regions that are not endowed. We use the auction data of Australian thoroughbred yearlings to empirically test our model and find consistent empirical patterns.