Industrial Centralization in Indonesia

In certain situations, economic liberalization policies canincrease the degree of spatial centralization of resources andspatial concentration of manufacturing in large metropolitanareas. In addition, historical patterns of location make itdifficult to alter the degree of centralization. This articleexplores these issues by specifying and estimating a nestedlogit model of industrial location of manufacturing activityin Java, focusing on the unincorporated sector. The resultsindicate that plants strongly prefer locations with mature plantsin related industries, which offer a built-up stock of localknowledge. In addition, the 1983 liberalization in Indonesiawas associated with increased centralization of the unincorporatedsector. Although the liberalization gave unincorporated firmsbetter access to government and other centralized services,firms needed to centralize to take advantage of these opportunitiesbecause the bureaucratic process is centralized and communicationsare poor. The relative increased growth of the corporate sectorfollowing liberalization may also have helped to further drawunincorporated plants into centralized locations.     

Agricultural Extension Policy in Australia: Public Funding And Market Failure

Trends in public expenditure on agricultural extension are examined for Agriculture Departments in four States. There is little evidence that the share of public resources going to extension has declined. However, new demands have meant that the nature of extension has changed. A strategic approach to examining issues, such as land degradation, for the source of market failure may better guide the use of scarce public resources than the traditional focus on the public goods characteristics of research and extension. The case for evaluating broad functions such as research and extension is becoming more questionable as these functions become more diverse.     

Brand‐Specific Design Effects: Form and Function

Product design is inherently a key component of brand strategy. Accordingly, significant resources are invested to improve product and brand performance; however, foundations for understanding the role product design plays in influencing actual consumer opinions from the marketplace have not been fully explored in the literature. This paper develops a conceptual framework illustrating how two critical design factors—form and function—impact consumer opinion and delineate brand‐specific effects. Nonmonotonic effects are identified, as well as the interaction effects of the individual factors among the dimensions. A longitudinal model based on objective measures of form and function is tested with a data set developed from models available in the U.S. automotive market from 1999–2007; it includes 16 firms, 32 brands, and 137 products. The results indicate the relationships between factors of form and function are multifarious and complex, but clearly play a significant role in forming consumer opinions, although they do exhibit diminishing returns. The findings further indicate brand‐specific effects exist, and consumer opinions vary by brand. The findings provide foundations for understanding the interplay between product development and brand management. Overall, this research supports the notion that brand strategies can be supported through the management of design dimensions.     

New estimates of the cost of capital for pharmaceutical firms

Academic researchers, as well as pharmaceutical firms themselves, often use the Capital Asset Pricing Model (CAPM) to estimate a firm's cost of capital. But the CAPM implicitly assumes that cash flows follow a random walk. This assumption is inconsistent with our finding that large U.S.-based pharmaceutical firms' cash flow growth rates display either momentum or mean-reversion. We show that growth rate momentum implies: (1) the systematic risk of a project increases monotonically with time to maturity of the cash flows; and (2) longer duration projects require a higher cost of capital. One of the practical implications of our results is that the traditional CAPM underestimates the cost of capital for some pharmaceutical firms by as much as 2.8%. These findings are quite relevant for the policy debate about the high rates of return earned by pharmaceutical companies, which some claim are pure rents and are not necessary to attract investors. Our theoretical and empirical analysis shows that high returns are often required to compensate for the higher systematic risk of long-duration pharmaceutical cash flows.     

A new business venture

The venture is into the business area of Medical Aids. The first steps were taken by the Division just over three years ago. This paper describes the action which was taken by the Pharmaceuticals Division of ICI Limited to move into a New Business Venture, the experiences so far and some of the lessons learned which either have confirmed or contradicted the original ideas.