Nonpoint-Source Pollution Reduction for an Iowa Watershed: An Application of Evolutionary Algorithms

We apply an integrated simulation-optimization framework to search for cost-efficient mix and location of agricultural conservation practices in a typical agricultural watershed for two types of nitrogen reduction targets: control of mean annual nitrogen loadings, and a “safety-first” type constraint, insisting that nitrogen targets be met in every weather realization (weather-resilient solutions). Evolutionary algorithms are developed for each of the appropriate water quality targets. Our approach allows for the derivation of a watershed-level total and marginal nitrogen abatement cost curve. Controlling for the probability of meeting water quality targets (looking for weather-resilient solutions) is found to be significantly more costly than controlling the average nitrogen loadings. Both types of solutions are assessed for robustness with respect to weather uncertainty: solutions selected to reduce average loadings do well under weather uncertainty, while the robustness of solutions selected to be resilient decreases with the stringency of the water quality goal. Nous avons appliqué un modèle intégré de simulation-optimisation pour trouver des combinaisons de pratiques agricoles de conservation efficaces en terme de coûts et les endroits où elles devraient être adoptées dans un bassin versant agricole typique pour deux types de cibles de réduction des charges d’azote : la surveillance des charges moyennes annuelles d’azote et une contrainte du type « sécurité d’abord », selon laquelle les cibles d’azote doivent être respectées peu importe les conditions météorologiques (solutions robustes aux changements météorologiques). Nous avons élaboré des algorithmes évolutifs pour chaque cible relative à la qualité de l’eau. Notre approche a permis de dériver la courbe de coût liéà la réduction marginale et totale de l’azote dans un bassin versant. L’ajustement de la probabilité que les cibles relatives à la qualité de l’eau soient respectées (solutions robustes aux changements météorologiques) s’est révélé significativement plus coûteux que de contrôler les charges moyennes d’azote. Nous avons évalué les deux types de solutions afin de vérifier leur performance dans des conditions météorologiques incertaines : les solutions retenues pour réduire les charges moyennes fonctionnent bien dans des conditions météorologiques incertaines, tandis que la performance des solutions robustes aux conditions météorologiques diminue avec le niveau visé de qualité de l’eau.     

Order flow and exchange rate dynamics in electronic brokerage system data

We analyze the association between order flow and exchange rates using a new dataset representing a majority of global interdealer transactions in the two most-traded currency pairs at the one minute frequency over a six-year time period. This long span of high-frequency data allows us to gain new insights about the joint behavior of these series. We first confirm the presence of a substantial association between interdealer order flow and exchange rate returns at horizons ranging from 1 min to two weeks, but find that the association is substantially weaker at longer horizons. We study the time-variation of the association between exchange rate returns and order flow both intradaily and over the long term, and show that the relationship appears to be stronger when market liquidity is lower. Overall, our study supports the view that liquidity effects play an important role in the relationship between order flow and exchange rate changes. This by no means rules out a role for order flow as a channel by which fundamental information is transmitted to the market, as we show that our findings are quite consistent with a recent model by Bacchetta and Van Wincoop (2006: Can information heterogeneity explain the exchange rate determination puzzle? American Economic Review, 96, pp. 552–576.) that combines both liquidity and information effects.     

Innovation Processes in the Russian Manufacturing Subsidiaries of Multinational Corporations: An Integrated View from Case Studies

The extant literature acknowledges the role of overseas subsidiaries in the growth and development of multinational companies (MNCs). Such subsidiaries are viewed as critical players in the innovation process at MNCs. This topic remains largely under-researched in the Russian context. This study aims to fill this gap by examining the dynamics of the innovation process in Russian-based subsidiaries of global MNCs. We present qualitative findings that indicate Russian subsidiaries are not only recipients of knowledge and technology developed elsewhere in the MNCs but are active developers of innovative products and solutions.     

RETAKING IN HIGH STAKES EXAMS: IS LESS MORE?

Placement, both in university and in the civil service, according to performance in competitive exams is the norm in much of the world. Repeat taking of such exams is common despite the private and social costs it imposes. We develop and estimate a structural model of exam retaking using data from Turkey's university placement exam. Limiting retaking results in all agents gaining ex ante and most gaining ex post. This result comes from a general equilibrium effect: Retakers crowd the market and impose negative spillovers on others by raising acceptance cutoffs.     

Random variables generated by ranks in dependent schemes

Some nonstationary sequences having independent vector of ranks and vector of order statistics are under consideration. We extend some characterizations in a class of independent r.v.'s to a class of Archimedean copula processes and construct the interpretation which gives us a simple way for simulating Archimedean copula processes. Received November 1997     

Local volatility dynamic models

This paper is concerned with the characterization of arbitrage-free dynamic stochastic models for the equity markets when Itô stochastic differential equations are used to model the dynamics of a set of basic instruments including, but not limited to, the underliers. We study these market models in the framework of the HJM philosophy originally articulated for Treasury bond markets. The main thrust of the paper is to characterize absence of arbitrage by a drift condition and a spot consistency condition for the coefficients of the local volatility dynamics.     

Entrepreneurship, innovation, and corruption

Efforts to control corruption increase levels of trust in the ability of the state and market institutions to reliably and impartially enforce law and the rules of trade. Such trust facilitates the development of arms-length trade and the coordination of complex economic activities. We posit that better control of corruption will also be associated with rising levels of innovation and entrepreneurship. Absent such trust, however, monitoring and other transactions cost should restrict the scale and scope of trade and thus, hamper productivity and investment in innovation and entrepreneurship. Longitudinal data from 64 nations lends support to our propositions, thus helping unpack the puzzling relationship between entrepreneurship, innovation, and corruption.     

The growth of the firm in (and out of) emerging economies

Starting with Peng and Heath (Academy of Management Review, 21: 492–528, 1996), the growth of the firm in emerging economies (EE) has received increasing attention in the literature in the last two decades. This line of research has not only extended our knowledge on firms’ strategic choices to the context of EE, but also proposed new perspectives on the growth of the firm. Leveraging prior research, this article focuses on three major modes for firm growth—organic, acquisitive, and network-based. For each mode, we identify new themes and insights emerging from the last two decades of research. They center on (1) compositional capabilities and frugal innovations for organic growth, (2) business groups and cross-border acquisitions for acquisitive growth, and (3) network capitalism and institutional transitions for network-based growth. Overall, we not only identify new themes and insights, but also outline important yet unresolved debates as future research directions.     

The role of customer participation in building new product development speed capabilities in turbulent environments

In a sample of 204 SMEs, this study investigates how customer co-creation impacts firms’ ability to increase new product development (NPD) speed. The results show firms that collaborate with customers in the NPD process at greater levels are able to increase NPD speed capabilities and commercialize products at a faster rate. In addition, environmental turbulence is investigated as to how it may impact the relationship between customer participation and NPD speed. The results show that customer participation in NPD allows firms to better manage turbulent environments by enhancing the speed at which new products are brought to market. Finally, the results show that NPD speed mediates the relationship between customer participation and the performance of new products, thus highlighting the importance of developing new products faster. The principle contribution of the study is the examination of an additional moderating factor in regard to customer participation and NPD speed. The second contribution of this research is that while previous studies have examined the individual impacts of customer participation on NPD speed and NPD speed on NPD performance, this research statistically demonstrates the mediating process among the three constructs.