Negotiating a Stable Government: An Application of Bargaining Theory to a Coalition Formation Model

In this paper, we apply bargaining theory to a certain model of coalition formation. The notions of a feasible government and a stable government are central in the model considered. By a government, we mean a pair consisting of a majority coalition and a policy supported by this coalition. The aim of this paper is to establish which stable government should be created if more than one stable government exists or, in case there is no stable one, which feasible government should be formed if more than one feasible government exists. Several bargaining procedures leading to the choice of one stable (or feasible) government are proposed. We define bargaining games in which only parties belonging to at least one stable (or feasible) government bargain over the creation of a government. We consider different bargaining costs. We investigate subgame perfect equilibria of the bargaining games defined. It turns out that the prospects of a party depend on the procedure applied, and on the bargaining costs assumed. We also apply the coalition formation model to the Polish Parliament after the 2001 elections and apply the different bargaining games for the creation of a government to this example.     

Adoption of SWC measures in South Limburg (The Netherlands): Experiences of a water manager

In the loess area of the southern part of Limburg soil erosion is responsible for damage in the agricultural area and the associated runoff leads to flooding of urban areas and deposition of mud on the infrastructure.Since the second half of last century erosion hazards and damage have increased, due to more intensive tillage of the soil. With a general use of artificial fertilizers, organic matter content of the soil dropped to critical levels. Besides that, activities in agriculture like enlargement of fields, use of heavy machinery and activities outside the agricultural area like the extension of the built-up area and infrastructure led to less infiltration and consequently to more runoff. The expected change of the climate – more intensive rain showers – may even aggravate the erosion problem in the future. Moreover, the general policy of protection of the urban areas against flooding is developing to a higher protection level.The public sector is responsible for general policies to control erosion and to bring the damage of flooding back to acceptable levels. The basic principle is to tackle the erosion problem at the source, on the farmer's field with measures among others by the introduction of non-turning-ploughing and mulching and preservation and expansion the area of grassland. At local level, specific erosion control measures and financial arrangements are made. Municipalities are supposed to prepare and guide local level erosion plans, where measures are taken to complement the individual on-farm erosion control measures. Municipalities have to solve small-scale problems (bottlenecks) with local flooding and sedimentation of mud, especially on infrastructure. To prevent flooding the Water Authority has the task to develop the water infrastructure mainly to buffer water and to convey runoff at a safe discharge (grass strips, grassed waterways).In the combat against erosion the farmers and the farmer's organizations took their responsibility. The efforts resulted in 1990 in an Erosion Ordinance (EO) lately revised in 2003. The EO is primarily a responsibility of the farmer's organisations. In 2000 authorities involved in erosion and flood control signed a covenant in which generic and specific interventions were agreed upon to realize in a period of 4 years. Tough the agreed measures are only partly realized in this period, the intentions of the covenant are still valid. In 2003 the farmer organizations introduced in the revised EO a new instrument: the Farm Erosion Management Plan (FEMP) in which a farmer can take its own responsibility to keep erosion risk at an acceptable level and to organize his own farm strategy. By taking enough measures in the FEMP, the farmer gets dispensation of several measures otherwise due to the EO. Farmers can rely on EU-subsidies when applying erosion control measures (cross-compliance). Both the EO and the FEMP are part of the EU Common Agricultural Policy (CAP).In spite of legislation, accepted responsibilities at different levels and financial support (incentives), erosion control interventions do not (yet) cover the whole area and not all stakeholders are equally motivated to implement and maintain the measures. In practice monitoring of the fulfilment of the EO and the FEMP is quite complicated, because of scattered land property, the complexity of the instruments and lack of (trained) controllers. At the moment the Water Authority is evaluating the effectiveness of measures taken by the FEMP in relation to general legislation of the EO.At municipality level several plans to solve the problems at locations where flooding and mud deposition occurs frequently are ready, but lack of funds will postpone execution of some of them.     

Morals or Economics? Institutional Investor Preferences for Corporate Social Responsibility

This article presents the results of a study that analysed whether social responsibility had any bearing on the decision making of institutional investors. Being that institutional investors prefer socially aligned organizations, this study explored to what extent the corporate actions and/or social/environmental investments influenced their decisions. Our results suggest that there are specific variables that affect the perceived value of the organization, leading to decisions to not only invest, but whether to hold or sell the shares, and therefore having a consequential impact on the capital market’s valuation.     

Cooperation in an Overlapping Generations Experiment

Recent theoretical work shows that folk theorems can be developed for infinite overlapping generations games. Cooperation in such games can be sustained as a Nash equilibrium. But, of course, there are other equilibria. This paper investigates experimentally whether cooperation actually occurs in a simple overlapping generations game. Subjects both play the game and formulate strategies. Our main finding is that subjects fail to exploit the intertemporal structure of the game. Even when we provided subjects with a recommendation to play the grim trigger strategy, most of the subjects still employed safe history-independent strategies. Journal of Economic Literature Classification Numbers: C72, C92, D90.     

Multinational Oil Companies and the Adoption of Sustainable Development: A Resource-Based and Institutional Theory Interpretation of Adoption Heterogeneity

Sustainable development is often framed as a social issue to which corporations should pay attention because it offers both opportunities and challenges. Through the use of institutional theory and the resource-based view of the firm, we shed some light on why, more than 20 years after sustainable development was first introduced, we see neither the adoption of this business model as dominant nor its converse, that is the total abandonment of the model as unworkable and unprofitable. We focus on multinational corporations (MNCs) because they were among the organizations first called to take action. In order to illustrate the institutional pressures MNCs face and their strategic response to these pressures, we analysed four major oil and gas multinationals subject to similar sustainable development pressures – climate change, biodiversity, renewable energy development and social investment. We argue that normative and coercive isomorphism does not occur at the global level because sustainable development is largely a stakeholder-driven rather than a broad social pressure. That is, host country interpretation of sustainable development pressures varies across an MNC’s subsidiary network. Based on the analysis of the four major MNCs’ annual reports from 2000 to 2005, we argue that mimetic isomorphism may occur, but since it implies the use of complex and intangible resources, mimetic processes are slow, rare and discretionary.     

The international spillover effects of pension reform

This paper explores how pension reforms in countries with PAYG schemes affect countries with funded systems. We use a two-country two-period overlapping-generations model, where the countries only differ in their pension systems. We distinguish between the case where a reform potentially leads to a Pareto improvement in the PAYG country, and where this is impossible. In the latter case, the funded country shares both in the costs and the benefits of the reform. However, if a Pareto-improving pension reform is feasible in the PAYG country, a Pareto improvement in the funded country is not guaranteed.     

The role of customer service in determining customer satisfaction

Most consumer satisfaction/dissatisfaction research is focussed either on identifying product classes and personal/usage characteristics associated with dissatisfaction, or is focussed on modelling the psychological processes underlying the phenomenon. Most retailers, on the other hand, focus only on handling customer complaints. This paper focuses on retailer controllable sources of customer dissatisfaction. Findings from a large scale Canadian survey of 982 cases of recent automobile buyers show that while there are some differences in the determinants of consumer satisfaction among four different car models, it is the dealer-related factors that exert the greatest effects. Specific implications are highlighted for the retailer’s attention and possible retail responses are discussed.     

Knowledge creation for practice in public sector management accounting by consultants and academics: Preliminary findings and directions for future research

This study is about knowledge creation for practice in public sector management accounting by consultants and academics. It shows that researchers emphasize the importance of practice, but worry about the prospects of a successful cross-fertilization between practice and research, because of the pressure they feel to publish in international research journals. Their contacts with consultants are limited. Consultants have limited access to academic research, because of pressures from their daily work. Knowledge created by consultants is initiated by problems coming from practice; it has to be ready-made for application in practice, and is often a combination of explicit and tacit knowledge. However, our interviews with researchers show a more diffuse picture; the knowledge created by some of them is disciplinary-driven and fundamental, whereas the research of others is more problem-driven and applied. Our study hints at two intermediary groups, i.e. consultant-researchers and consultants working in the expertise centres of their firms, both of which can potentially overcome hindrances in the communication between consultancy and research.