The effects of rent asymmetries in experimental auction markets

We report the results of twelve ‘double-auction’ market experiments designed to analyze the effects of asymmetric induced supply and demand configurations on the price convergence path toward a competitive equilibrium. The proposition (convergence bias) that prices tend to approach the competitive equilibrium from above (below) when consumer surplus is greater (less) than producer surplus cannot be rejected. We do, however, reject the proposition (convergence symmetry) that these convergence biases are of equal absolute magnitude. Excesses of producer over consumer surplus are found to have a more pronounced effect on the sequence of contract prices.     

Urbanization in Developing Countries

The rapid urbanization in many developing countries over thepast half century seems to have been accompanied by excessivelyhigh levels of concentration of the urban population in verylarge cities. Some degree of urban concentration may be desirableinitially to reduce inter- and intraregional infrastructureexpenditures. But in a mature system of cities, economic activityis more spread out. Standardized manufacturing production tendsto be deconcentrated into smaller and medium-size metropolitanareas, whereas production in large metropolitan areas focuseson services, research and development, and nonstandardized manufacturing.The costs of excessive concentration (traffic accidents, healthcosts from exposure to high levels of air and water pollution,and time lost to long commutes) stem from the large size ofmegacities and underdeveloped institutions and human resourcesfor urban planning and management. Alleviating excessively highurban concentration requires investments in interregional transportand telecommunications to facilitate deconcentration of industry.It also requires fiscal deconcentration, so that interior citiescan raise the fiscal resources and provide the services neededto compete with primate cities for industry and population.      

The Influence of Long-Term Performance Plans on Earnings Management and Firm Performance

Boards of directors often implement long-term performance plans (LTPP) to focus management's attention on enhancing long-term shareholder value instead of concentrating their efforts on short-term earnings. This study provides estimation results suggesting that firms that compensate managers with LTPP are associated with lower levels of managed earnings than firms that have only short-term bonus plans. In addition, we find evidence that suggests that firms with long-term performance plans have significantly higher annual returns than firms that have only short-term bonus plans. We also find that firms with long-term performance plans are typically larger firms with smaller managerial ownership and larger institutional ownership than firms without long-term performance plans.     

Determinants of New Product Performance: A Review and Meta-Analysis

Previous empirical research on new product performance has provided considerable evidence that a wide variety of antecedent factors can influence the outcomes of new product development activity. Mitzi Montoya-Weiss and Roger Calantone conducted a comprehensive review of this literature and observed a wide variety of study designs and methodological approaches. They developed quantitative comparisons of the results, which, although cumbersome, provide a look at the persistent exploratory nature of this research. They report a wide variation in results that are surprisingly nonconvergent. Recommendations for broadening the range of factors considered and other approaches for accelerating the forward movement of the discipline are provided.     

A sensitivity analysis of expected profitability of pharmaceutical research and development

An indirect effect of increased regulation of the pharmaceutical industry in the USA has been a reduction in the effective patent life for a new drug. The reason is that the average time to develop a new chemical entity and gain regulatory approval far exceeds the time necessary to obtain a patent. The period of patent protection now averages only 10 years compared to the legal life of 17 years. In this article we describe a sensitivity analysis which sheds some light on the relationship between product life and profitability. Based upon a number of important assumptions, we show, for example, that at a 10% real rate of return the average 1970–1976 new drug required 19 years to break even. At an 8% real rate of return, 12 years would permit the firm to break even.     

Critical Development Activities for Really New versus Incremental Products

Does the development of really new products require a different approach from that of incremental new products? Current research and management practice seem to suggest that any successful new product development (NPD) process comprises a set of key activities, regardless of a product's innovativeness. It seems almost foolhardy to suggest that NPD could proceed without proficiency in all of the following tasks: strategic planning, idea development and screening, business and market opportunity analysis, technical development, product testing, and product commercialization. Suggesting that the difference may be in the details, X. Michael Song and Mitzi Montoya-Weiss present the results of a study that examines the development of 163 really new products and 169 incremental new products. The study's objective is to compare the NPD processes and performance outcomes of really new and incremental products. In other words, the study examines the interplay between a product's innovativeness, the NPD process, and the product's performance in the marketplace. For the firms in the study, four sets of NPD activities—strategic planning, market analysis, technical development, and product commercialization—are key determinants of new product success for both really new products and incremental products. However, strategic planning and business and market opportunity analysis activities play contrasting roles for the two types of products. Working to improve proficiency in business and market opportunity analysis may be counterproductive for really new products, but it can increase the profitability of incremental products. Conversely, improving the proficiency of strategic planning activities has a positive effect on the profitability of the really new products, but it has a negative effect for the incremental products. Overall, the really new products in the study surpass the incremental products in meeting profit objectives. Comparing current practice to best practice, the firms in the study have room for improvement. For both really new and incremental products, the firms in the study do not place sufficient emphasis on product commercialization activities. The participants also need to reassess the relative emphasis they place on strategic planning activities. The projects involving really new products do not place sufficient emphasis on strategic planning, while the incremental projects exhibit a relatively high level of proficiency in this area—exactly the opposite of the order that this study recommends.     

The Dynamics of Jabotabek Development

This paper examines the dynamics of urban development of the Jakarta metropolitan region, called Jabotabek, from 1980 through the early 1990s. We focus on the rapidly changing spatial allocation of residences and business, finding that Jabotabek is following expected developmental patterns but faces special and some critical problems Population densities remain unusually high and urban development is hindered by very poor land market institutions—weakly defined property rights particularly for traditional low income residents, complete lack of active land use planning, and relatively low infrastructure investments. Industry is rapidly suburbanising to take of advantage of low land prices and wages in suburban Botabek. With toll road construction east and west from the city, within the five-year period 1986–1991, Jabotabek moved from being a monocentric city where core city industrial activity dominated to a predominantly multi-centred city. These developments and implicit government policy have hurt small-scale industry, which ultimately will hinder the whole development process. Issues of spatial mismatch, where low income workers' residences and workplaces become inordinately spatially separated due to government policies in land markets, herald increasing problems of urban underemployment and social unrest.     

From monopoly to voice effects? British workplace unionism and productivity performance into the new millennium

Britain has featured prominently in debates about unionism and productivity. This article suggests a recent revolution in the productivity effect of British unionism. A thorough review of extant evidence at various levels of aggregation indicates that whatever the broader cost to employee welfare and well-being, the hollowing and erosion of workplace unionism under Thatcherism delivered a one-off productivity dividend. However, by the turn of the millennium, extant Workplace Employment Relations Survey (WERS) analysis shows that workplace unionism, where it remained, was no longer robustly linked to poorer productivity performance. Our private sector analysis of WERS2011 confirms this, while our analysis of the WERS2004–2011 panel indicates that stronger workplace unionism now positively promotes private sector productivity. A thorough contemplation of the shifting concomitants of modern British unionism suggests a variety of processes which may underlie our striking panel findings, underscoring the suggestion that there has been a revolution in British unionism's productivity implications, but also indicating mechanisms which may underlie positive productivity effects of joint regulation already apparent in other countries.     

How migration restrictions limit agglomeration and productivity in China

China strongly restricts rural–urban migration, resulting in a well acknowledged surplus of labor in agriculture. But migration is also restricted within sectors. This paper argues that these intra-sector restrictions lead to insufficient agglomeration of economic activity in both the rural industrial and urban sectors, with resulting first order losses in GDP. For urban areas the paper estimates a city productivity relationship, based on city GDP numbers. The effects of access, educational attainment, FDI, and public infrastructure on productivity are estimated. Given these, worker productivity is shown to be an inverted U-shape function of city employment, with the peak point shifting out as industrial composition moves from manufacturing to services, as predicted by urban theory. As far as we know this is the first paper to actually estimate the relationship between output per worker and city scale for any country. The majority of Chinese cities are shown to be potentially undersized—below the lower bound on the 95% confidence interval about the size where their output per worker peaks. The paper calculates the large gains from increased agglomeration in both the rural industrial and urban sectors.