The nature of economic change and management in a new knowledge based information economy

The development of management theory and practice and their informational assumptions are followed over three phases of economic development; (1) the pre-oil crisis experience 1969–1975, (2) the post oil crisis sobering up through most of the 1990s and (3) the emergence of globally distributed production organizations, blurring the notion of the firm to be managed. The change from a belief in a predictable environment and only marginally uninformed actors to an increasing recognition of the fundamental ignorance that enters all business decisions, the consequent business mistakes and that learning between the periods has been of limited value and often misleading is found to be reflected in business information systems.The increased rate of failure among large firms in recent decades appears to be related to the increasing complexity of business decisions, the decreased reliability of learning and the difficulties of controlling the value chain in globally distributed production.     

On Learning to Cooperate

This paper shows that experimentation can have the effect of inducing outcomes that are “far” from Nash in a learning model similar to that studied by D. Fudenberg and D. K. Levine (1993, Econometrica61, 547-573). The game under consideration is a version of a finitely repeated prisoner's dilemma, and the average length of players' lifetimes is arbitrarily large, but fixed. If the number of stages in the prisoner's dilemma is sufficiently large, then experimentation induces cooperation within the society on an arbitrarily large scale, even though the beliefs of almost all players are eventually within an arbitrary η>0 of being correct at all of the information sets in the game. Journal of Economic Literature Classification Numbers: C72.     

Information Structure and the Tragedy of the Commons in Resource Extraction

Synopsis This paper considers the well-known Levhari-Mirman discrete-time model of resource extraction, and investigates the effects of the information structure of the dynamic game – open-loop, Markovian or history-dependent – on the equilibrium consumption path and the overall utility of the agents. Due to the special structure of the model, the open-loop regime yields a Pareto-optimal outcome. The Markovian regime leads to the most pronounced version of the tragedy of the commons. History-dependent behavior yields an outcome set that is intermediate between the other two cases, and that may include the Pareto-optimal outcome in some cases. The level of efficiency of equilibrium behaviour is thus U-shaped as a function of the level of information the agents’ extraction strategies are based on. The analysis suggests that in environments characterized by a dynamic (and no market) externality, forcing agents to commit to open-loop behavior would constitute welfare-improving regulation.     

Business Cycles, the Exchange Rate, and Demand for Antidumping Protection in Mexico

Antidumping actions in the US and EU are known to be linked to macroeconomic conditions. In part, this is because positive injury findings may be easier to make in a downturn, increasing the chance of success for complainants. We explore the evidence for Mexico, one of the main “new” antidumping regimes. Injury determination is also critical in Mexico’s antidumping policy, as a majority of unsuccessful complaints have been rejected because of negative injury findings rather than negative findings of dumping. Working with data from 1987 to 2000, we provide evidence for a relationship between macroeconomic factors and antidumping complaints, including current account and exchange rate movements, and both local and global general macroeconomic conditions.     

Some improvements in design of atmospheric ammonia storage tanks of the double integrity type

This paper describes a new atmospheric ammonia storage tank in Iceland. Some modifications have been made to the former common open cup design of double integrity tanks. Another modification is described, dry air is bled under the cladding of the sidewall insulation to protect the insulation from moisture penetration under the vapor barrier which results in frost damages.     

Strategic Environmental Policy Under Incomplete Information

This paper introduces incomplete information into recent analyses of strategic environmental policy. It is shown how asymmetric information between planners and producers affects national incentives to impose strategic environmental standards on domestic industries in international oligopolistic competition. Relative to the full-information case, incomplete information is likely to mitigate allocative distortions originating from strategic behaviour. A countervailing effect, tending to raise distortion, is however revealed from the analysis. This effect is absent when governments intervene in free trade through direct production subsidies. The results suggest that incentives to capture foreign rents are less reduced due to private information, when environmental standards, rather than direct production subsidies, are the strategic instrument.     

Worse than others but better than before: Integrating social and temporal comparison perspectives to explain executive turnover via pay standing and pay growth

Organizations often pay greater salaries to higher‐ranking executives compared to lower‐ranking executives. While this method can be useful for retaining those at the organization's apex, it may also incline executives at the bottom of the pay pyramid to see themselves at a disadvantage and thus exit the firm. Naturally, organizations often want to retain some of their lower‐paid, but highly valuable executives; the question, then, is how organizations can reduce the turnover of lower‐ranking executives. By integrating social with temporal comparison theory, we argue that, when executives earn relatively less than their peers, more pay growth (i.e., individual pay increases over time) leads to less turnover. The results of our analysis, which covered almost 20 years of objective data on a large sample of U.S. top executives, provide support for our theory.     

Welfare Implications of Community Forest Plantations in Developing Countries: The Orissa Social Forestry Project

Community forest plantations are a common intervention in developing countries. We use household and remote sensing data from Orissa, India, to estimate welfare effects of community forest plantations, in terms of the value of decreased collection times plantations afford users. A selection model, accounting for possible jointness in site location and productivity, is used to estimate collection production functions for different household labor categories in natural and community forests. Two measures of an opportunity cost of time are used to determine welfare effects of time saved due to community forests. We find access to community forests is important to marginal productivity of different labor categories, but to different degrees, highlighting the need to disaggregate household data when analyzing these interventions. We also find substantial welfare improvements from time savings for many households and villages.     

Capital investment and determinants of financial constraints in Estonia

Unlike previous empirical work concerning investment behavior and the determinants of liquidity constraints, we use a switching regression framework when sample separation is unknown and endogenous and firms are assumed to operate either in the financially constrained or in the financially unconstrained regime. By using new panel data for Estonian companies during 1993–2002 we find that: (i) investment behavior is characterized by two distinct regimes; (ii) the likelihood of being financially constrained is higher in firms that are recently privatized, small and where ownership is concentrated in the hands of insiders and the state; (iii) the actual probabilities of operating in the financially constrained regime are quite high and essentially stable during the whole period under consideration; (iv) ownership structure affects investment beyond its indirect effects through financial constraints.