Markovian equilibrium in a class of stochastic games: existence theorems for discounted and undiscounted models

Summary We study a strategic version of the neoclassical growth model under possible production uncertainty. For a general specification of the problem, we establish (i) the existence of stationary Markov equilibria in pure strategies for the discounted game, and (ii) the convergence, under a boundedness condition, of discounted equilibrium strategies to a pure strategy stationary Markovian equilibrium of the undiscounted game as the discount factor tends to unity. The same techniques can be used to prove that such convergence also obtains in all finitestate, finite-action stochastic games satisfying a certain full communicability condition. These results are of special interest since there are well known examples in the literature in which the limit of discounted equilibria fails to be an equilibrium of the undiscounted game.We are grateful to Marcus Berliant, M. Ali Khan, Mukul Majumdar, and an anonymous referee for helpful suggestions, and to Bonnie Huck for technical assistance. The first author acknowledges research support from the Columbia University Council for the Social Sciences.     

Small firm mutual funds: Additional evidence on the small firm effect

Returns generated with small firm mutual fund data are used to examine the extent to which identification of a small firm effect is due to the difficulty in measuring the direct and indirect transaction costs involved in investing in the common shares of small capitalization stocks. Little if any evidence of the excess risk-adjusted returns is obtained for either of the period 1978–1983, when the small firm effect was observed, or the period 1984–1989, when it was not. The small firm effect may therefore be attributed to (1) higher direct transaction costs including bid-ask spread and broker fees and (2) higher indirect transaction costs including portfolio management expenses and market impact costs.The authors thank an anonymous referee for helpful comments on an earlier version of this paper, and Brett Salazar for valuable assistance in data collection. Errors remain our own.     

Can we afford international human rights?

In a recent important book,The Ethics of International Business, Tom Donaldson argues that multinational corporations (as well as individuals and nationstates) must, at a minimum, respect international human rights. For a purported right to be such a fundamental right it must satisfy three conditions. Donaldson calls the third condition the fairness-affordability condition. The affordability part of this condition holds that moral agents must be capable of paying for the burdens and responsibilities that a proposed human right would impose. If this is impossible, then the purported right is not an international human right.I argue that Donaldson's affordability condition is subject to four objections which reveal its untenability as one of the conditions upon which identification of international human rights must rest. I offer another way of treating problems of affordability and capability when it comes to such rights that all moral agents must respect.George G. Brenkert is Professor of Philosophy at the University of Tennessee/Knoxville. He has recently completed a book,Political Freedom, to be published by Routledge. His current research focuses on issues in business ethics.     

Pitfalls and opportunities for environmental marketers

Issues such as global warming, ozone depletion, insufficient landfill capacity, and excess packaging are foremost on the minds of consumers. Companies face a myriad of environmental challenges, but they also recognize the opportunities to be gained by implementing responsible marketing action plans.     

Creating a global health care company

Global pharmaceutical mergers have spread the huge costs of research and enabled companies to sell their products in countries where they previously lacked a presence. Here's how the Beecham-SmithKline Beckman marriage was developed to propel the organization into a position as a worldwide player in the drug industry.     

Umpire and batsman: Is it cricket to be both?

The paper is a response to Richard De George's essay, Theological Ethics and Business Ethics. It defends the possibility of theologically oriented approaches to business ethics by pointing out certain deficiencies in business ethics narrowly based on the premisses of analytic moral philosophy. In particular it argues, in a manner consistent with Alasdair MacIntyre's After Virtue (1981), that such a program of business ethics is insufficiently critical of its own roots in the social fiction of bureaucratic rationality. After showing how this ideology governs De George's negative judgments on theological approaches to business ethics, the author outlines a program of critical reflection that would draw from the intellectual traditions of both theology and philosophy in order to facilitate a dialogue in business ethics that no longer is captive in the Iron Cage of bureaucratic rationality. Dennis P. McCann is an Associate Professor of Religious Studies at De Paul University. He has served on the faculties of Reed College and Lewis and Clark College. He is the author of Christian Realism and Liberation Theology (1981) and a co-author of Polity and Praxis: A Program for American Practical Theology (1985).     

Assessing black progress: voting and citizenship rights,residency and housing,education

Farley discusses progress US blacks have made in the areas of voting and citizenship rights, residency and housing, and education. A major goal of the civil rights movement was to permit blacks to influence the electoral process in the same manner as whites. Most important in this regard was the Voting Rights Act of 1965; the proportion of southern blacks casting ballots increased sharply since the early 1960s. The Civil Rights Act of 1875 outlawed racial segregation in public accommodations, but by the turn of the century, Jim Crow laws in southern states called for segregation in most public places. Common customs and government policy in the North resulted in similar segregation of blacks from whites. The Montgomery bus boycott and similar protests in dozens of other cities led to enactment of Title II of the Civil Rights Act of 1964, which proscribed such racial practices. By the late 1960s, blacks in all regions could use the same public accommodations as whites. In most metropolitan areas, de facto racial segregation persisted long after the laws were changed. Supreme Court decisions and local open-housing ordinances supported the right of blacks to live where they could afford. However the major change was the Fair Housing Act of 1968, which outlawed racial discrimination in the sale or rental of most housing units. The separation of blacks from whites did not end in the 1970s. Today, in areas which have large black populations, there are many central city neighborhoods and a few in the suburbs which are either all-black or are becoming exclusively black enclaves. Most other neighborhoods have no more than token black populations. Another major effort of civil rights organizations has been the upgrading of housing quality for blacks. By 1980, only 6% of the homes and apartments occupied by blacks lacked complete plumbing facilities (down from 50% in 1940). Unlike the modest changes in residential segregation, racial differences in housing quality have been greatly reduced. By 1960, black students approached parity with whites in terms of measurable aspects of school facilities. In 1940, young blacks averaged about 3 fewer years of educational attainment than whites; the time is nearing when the years of schooling completed by blacks and whites will be the same. In small and medium-sized cities throughout the country, public schools are generally integrated. However, the situation in the largest metropolitan areas is very different. Today, large public schools are segregated, in large part, because blacks and whites live in separate school districts.     

Corporate Strategy and ethics

Corporate Strategy has emerged as a central metaphor for private-sector enterprise. Given inherent imperfections in markets, one important question to consider is how well the practice of Corporate Strategy contributes to social welfare. An account of the implicit morality of free markets is developed as a standard against which two particular, second best solutions to market imperfections — namely, American federal antitrust policy and Corporate Strategy — are compared. Corporate Strategy is subsequently evaluated in terms of the fundamental principles of Rawls' theory of justice. In both analyses, Corporate Strategy is found to depart significantly and systematically from the standards of social justice. An alternative principle, grounded in the concept of duty, is introduced as a means for reconceptualizing Corporate Strategy.Daniel R. Gilbert, Jr. is a doctoral student in the Strategic Management and Organization program, School of Management, University of Minnesota, and also serves as an Instructor in Strategic Management and a Research Associate in the Strategic Management Research Center.     

Ethical encounters of the second kind

When our society holds widely shared norms and values, we can agree on what constitutes unethical business practices. To the extent our social consensus is unraveling, agreement becomes increasingly problematic. Unfortunately, mainstream Western moral philosophy offers no guidance in this situation. We must therefore begin to focus on the types of social relationships that must exist for there to be agreement on what is right, good and just. This line of argument is, at best, merely suggested in discussions and articles on business ethics. Jonathan B. King is Associate Professor of Managment at the College of Business at Oregon State University. He received his B.A. in philosophy from Antioch College (1965); subsequently served for eight years as an officer in the United States Navy; received his M.B.A. (1975) and Ph.D. (1980) in Business, Government and Society from the University of Washington. His primary research interests are in the areas of epistemology and moral philosophy — e.g., the contribution of the liberal arts to interpretive thought, the sociology of moral knowledge, and the organizational distortion of information. His most important publications are: Teaching Business Ethics, Exchange1984 and A Case for the Humanities Perspective, Organizational Behavior Teaching Journal1984