Entry, Competitiveness and Exports: Evidence from the Indian Firm Data

This paper attempts to evaluate the effects of industrial de-licensing of 1991 and WTO-induced tariff-reforms of 1995 on domestic competitiveness and export performances of the Indian manufacturing during the post-1991. Unlike existing empirical studies not backed by theoretical underpinnings, the paper has been founded on an open-economy-oligopoly-model framework. The paper develops an econometric method of estimating the output from data on sales of the firms, thereby estimating the firms?? marginal cost, which is conducive for the entire empirical analysis with a unified set of firm data. Using firm level data for 14 sectors for the period 1990?C2008, it is observed that there has been an increase in the number of firms resulting in a fall in the concentration ratio and elasticity of demand at the point of equilibrium is generally less than unity and is declining over-time. The panel regression results of increasing exports by bigger firms also conforms the theoretical predictions.     

Does IPO Pricing Reflect Public Information? New Insights from Equity Carve‐Outs

We examine the efficiency of initial public offering (IPO) pricing using a sample of over 300 equity carve‐outs from 1985 to 2009. The partial adjustment theory posits that the initial return of IPOs is predictable based on private information, but public information is fully incorporated. Prospect theory is consistent with both private and public information not being fully incorporated in the offer price. Our analysis confirms that both price update and initial return of carve‐out IPOs can be predicted based on the parent firm's returns during the prepricing and preissuing periods. Further, postissue ownership of the parent firm is associated with significantly higher price update and initial return, while IPOs where the majority of the proceeds are paid out register lower initial return. The size of the subsidiary and relative size of the offering are also significantly related to price update and initial return. These findings are consistent with prospect theory.     

On the Determinants of REIT Capital Structure: Evidence from around the World

The Journal of Real Estate Finance and Economics - Using a sample of REITs from twelve countries around the world, we examine the determinants of REIT capital structure. We investigate...     

Endogeneity in survey research

Endogeneity is a crucial problem in survey-based empirical research on marketing strategy (MS) and inter-organizational relationships (IORs); if not addressed, it can cause researchers to arrive at flawed conclusions and to offer poor advice to practitioners. Although the field is increasingly cognizant of endogeneity-related issues, many authors fail to properly address it, particularly in survey-based research. Emphasizing the role of essential heterogeneity, this article develops an overarching framework to help improve the understanding of endogeneity problems and how to tackle them when researchers use cross-sectional survey-based data. The authors provide explanations of and advice for how MS and IOR researchers can address six “painful” and sometimes hidden decisions: 1) Do you have an endogeneity problem? 2) What technique/estimator is appropriate? 3) What instrumental variables (IVs) should be chosen? 4) How should IVs be evaluated empirically? 5) How should the results be interpreted and evaluated? and 6) What results should you report? The authors provide a practical flowchart to guide researchers in their efforts to address endogeneity-related concerns.     

Corruption,market quality,and entry deterrence in emerging economies

In many emerging economies incumbent firms often use dubious means to deter entry of other firms. We analyze this scenario in a three‐stage game of entry deterrence. The incumbent has incomplete information about the entrant's costs but can increase this cost by resorting to unfair means (e.g. bribing a politician who harms the entrant). We completely characterize the optimal bribe and show that this depends on the “fairness index” and the “differentiation” parameter. We also show that zero bribes need not maximize welfare and market quality. Our results seem to be compatible with anecdotal evidence from emerging economies such as India.     

Durability Versus Concentration as an Explanation for Price Inflexibility

We document the extent of price rigidity across United States manufacturing industries in the 1980s and early 1990s and compare rigidity across different phases of the business cycle. We measure price rigidity in three ways – each under four different sets of assumptions. We take an approach that relies on disaggregated data; we look at price patterns for over 4000 individual manufactured commodities. Both durability and seller concentration are found to be important factors explaining differences in price rigidity across industrial product classes. Using our data, we replicate the regression results found in Carlton (1986) that were based on actual transaction prices from the 1960s.     

Endogenous Average Cost Based Access Pricing

We analyze an endogenous average cost based access pricing rule, where both the regulated firm and its rivals realize the interdependence among their outputs and the regulated access price. In contrast, the existing literature on access pricing has always assumed that the access price is exogenously fixed ex-ante. We show that endogenous access pricing neutralizes the artificial cost advantage that is enjoyed by the incumbent firm. Further, endogenous access pricing results in a consumer surplus that is equal to or higher than that under exogenous access pricing. If the entrant is more efficient than the incumbent, then the welfare under endogenous access pricing is higher than that under exogenous access pricing.     

Does the Confucius Institute Network Impact Cultural Distance? A Panel Data Analysis of Cross‐Border Flows in and out of China

This paper examines the impact of cultural distance in general and the Confucius Institute Network in particular on cross‐border flows of tourists, goods and investment in and out of China. We estimate a panel gravity model of inbound and outbound flows between 2004 and 2012. We find that the presence of Confucius Institute(s) in the source country increases inbound tourism and equity flows and outbound export and FDI flows for China, while other measures of cultural distance have less of an impact.