Emissions abatement R&D: Dynamic competition in supply schedules

This paper investigates the optimal environmental policy (the mix of emissions tax and research and development [R&D] subsidy) in a dynamic setting when two firms, producing differentiated products, compete in the output market over time. Firms compete in a differential game setting over supply schedules, which encompasses a continuum of imperfect competition equilibria from Bertrand to Cournot. Although production generates environmentally damaging emissions, firms can undertake R&D that has the sole purpose of reducing emissions. In addition to characterizing the optimal policy, we examine how the optimal tax and subsidy, and the optimal level of abatement, change as competition intensifies, as the dynamic parameters change, and as the investment in abatement technology changes. In this setting, competition increases welfare through its impact on the final goods price. However, lower prices result in larger quantities and more pollution. Our key contribution is to show how the impact of increased competition on welfare depends on the extent of the market and the nature of preferences and technology.     

Strategic Interaction amongst Australia's East Coast Ports

Australia's principal container ports, located in its state capitals, are owned and operated by state authorities that largely return profits from port operations to state governments. Since they govern the volumes of trade in most merchandise, they command immense influence over the openness and flexibility of the national economy. In this study, we estimate the elasticities of substitution between container services of ports in Brisbane, Sydney and Melbourne. We also examine the pricing of port services to estimate the extent of their interaction, from which we derive conjectural variations parameters to assess the actual and potential levels of price collusion. The results confirm the conventional wisdom that the degree of substitution between the major east coast ports is small. While this highlights the possibility that these ports possess substantial market power, actual mark ups are considerably smaller than the predicted mark ups, suggesting that the ports' localised monopoly power is constrained by factors other than price competition.     

A model of seller holdout

Summary. We model a buyer who wishes to combine objects owned by two separate sellers in order to realize higher value. Sellers are able to avoid entering into negotiations with the buyer, so that the order in which they negotiate is endogenous. Holdout occurs if at least one of the sellers is not present in the first round of negotiations. We demonstrate that complementarity of the buyers technology is a necessary condition for equilibrium holdout. Moreover, a rise in complementarity leads to an increased likelihood of holdout, and an increased efficiency loss. Applications include patents, the land assembly problem, and mergers.Received: 20 November 2002, Revised: 4 September 2003JEL Classification Numbers: L14, L21, C78.Correspondence to: Flavio MenezesThis paper benefited from insights by Paulo Monteiro. Thanks to seminar participants at the ANU, the University of Sydney and the University of Arizona. Murali Agastya, Robert Innes, John Quiggin, Kunal Sengupta and anonymous referees provided useful feedback. F. Menezes gratefully acknowledges the support of ARC grant (no. 000000055). Pitchford is grateful for the use of economics department facilities while a visiting scholar at Harvard University.     

Dynamic limit pricing

I study a multiperiod model of limit pricing under one‐sided incomplete information. I characterize pooling and separating equilibria and their existence and determine when these involve limit pricing. For some parameter constellations, the unique equilibrium surviving a D1 type refinement involves immediate separation on monopoly prices. For others, there are limit price equilibria surviving the refinement in which different types may initially pool and then (possibly) separate. Separation involves setting prices such that the inefficient incumbent's profits from mimicking are negative. As the horizon increases or as firms become more patient, limit pricing becomes increasingly difficult to sustain in equilibrium.     

THE INNOVATION‐EMPLOYMENT NEXUS: A CRITICAL SURVEY OF THEORY AND EMPIRICS

Understanding whether technical change is beneficial or detrimental for employment is at the center of the policy debate, especially in phases of economic recession. So far, the effects of innovation – in its manifold declinations and intrinsic complexity – on labor demand have proven to be not unequivocal. This essay critically reviews the role of technical change in shaping employment dynamics at different levels of aggregation. First, it disentangles theoretically the role of different compensation mechanisms through which employment adjusts after an innovation is introduced. Second, it critically presents the most recent empirical evidence on the topic, with a focus on methods and limitations. Finally, it provides an attempt to conceptualize a number of stylized facts and empirical regularities on the innovation‐employment nexus.     

Dynamics of financial returns densities: A functional approach applied to the Bovespa intraday index

We model the stochastic evolution of the probability density functions (PDFs) of Ibovespa intraday returns over business days, in a functional time series framework. We find evidence that the dynamic structure of the PDFs reduces to a vector process lying in a two-dimensional space. Our main contributions are as follows. First, we provide further insights into the finite-dimensional decomposition of the curve process: it is shown that its evolution can be interpreted as a dynamic dispersion-symmetry shift. Second, we provide an application to realized volatility forecasting, with a forecasting ability that is comparable to those of HAR realized volatility models in the model confidence set framework.     

Tourism satisfaction and perspectives: an exploratory study in Italy

Quality & Quantity - The aim of the paper is to analyze the specific features of tourism in Italy through tourists’ behaviour and satisfaction level and to individuate future...     

COOPERATIVE FIRMS AND THE CRISIS: EVIDENCE FROM SOME ITALIAN MIXED OLIGOPOLIES

We investigate how cooperative firms reacted to the current crisis. This allows us to compare the behaviour of cooperative and conventional firms facing exogenous shifts in demand. After a short survey of a stream of theoretical literature, we analyze a large group of Italian production cooperatives in the periods 2003–2010 and 1994–2011 and we contrast co‐ops behaviour with the overall trend in the industries in which they operate. Our sample's evidence suggests that the cooperative's behaviour has a stabilizing effect on employment with respect to shocks in output demand. Unlike profit‐maximizers, cooperative firms seem to be adjusting pay more than employment when facing shocks. Production co‐ops look better equipped than their profit‐maximizing counterparts in tackling the long recession also because they have been very cautious in their profit policies over time. Unlike conventional firms, they have significantly increased their own equity during ‘good’ years instead of distributing large dividends to their members.     

Lessons learned from Brazilian multinationals’ internationalization strategies

Internationalization of emerging market multinationals is a recent phenomenon gaining importance in the global economy. This foreign expansion of a new breed of companies has challenged established theories and practices in the field of international business (Cuervo-Cazurra, 2007). This article addresses the issue of whether or not there is something to learn from these emerging market companies and their foreign expansion. Focusing on the international trajectories of four Brazilian multinationals (i.e., Odebrecht, Embraer, Stefanini, and Marcopolo), this study analyzes their strategies and managerial processes during and after the recent economic crisis with regards to internationalization. Our qualitative fieldwork suggests that the trajectories of these Brazilian multinationals are quite unstructured and evolve as a reaction to the opportunities they face in international markets. It seems all four companies in our sample shared a strong entrepreneurial spirit and a high motivation to expand their international operations despite the crisis and the obstacles they faced. Our findings and suggestions in terms of lessons learned should provide valuable implications for multinational managers from other emerging markets by providing a better understanding of how Brazilian multinationals expand internationally, deal with economic crisis, and manage relationships with local and foreign institutions.