Voting in assemblies of shareholders and incomplete markets

Summary. An economy with two dates is considered, one state at the first date and a finite number of states at the last date. Shareholders determine production plans by voting - one share, one vote - and at -majority stable stock market equilibria, alternative production plans are supported by at most percent of the shareholders. It is shown that a -majority stable stock market equilibrium exists if where S is the number of states at the last date and J is the number of firms. Moreover, an example shows that -majority stable stock market equilibria need not exist for smaller s.Received: 23 December 2002, Revised: 14 June 2004, JEL Classification Numbers: D21, D52, D71, G39. Correspondence to: Hervé CrésThe authors are grateful to an anonymous referee for helpful comments and suggestions. Financial support from the Danish Research Councils and hospitality of HEC is gratefully acknowledged by Mich Tvede and support from Fondation HEC is gratefully acknowledged by Hervé Crés.     

Do global CO2 emissions from fossil-fuel consumption exhibit long memory? a fractional-integration analysis

In this article we use an autoregressive fractionally integrated moving average approach to measure the degree of fractional integration of aggregate world CO₂ emissions and its five components – coal, oil, gas, cement, and gas flaring. We find that all variables are stationary and mean reverting, but exhibit long-term memory. Our results suggest that both coal and oil combustion emissions have the weakest degree of long-range dependence, while emissions from gas and gas flaring have the strongest. With evidence of long memory, we conclude that transitory policy shocks are likely to have long-lasting effects, but not permanent effects. Accordingly, permanent effects on CO₂ emissions require a more permanent policy stance. In this context, if one were to rely only on testing for stationarity and non-stationarity, one would likely conclude in favour of non-stationarity, and therefore that even transitory policy shocks have permanent effects. Our fractional-integration analysis highlights that this is not the case.     

R&D Subsidies,Spillovers, and Privatization in Mixed Markets

We examine the use of subsidies to research and development (R&D) in a mixed and a private duopoly market. We show that the socially optimal R&D subsidy is increasing in the degree of spillovers, but it is lower in the private duopoly. The optimal R&D subsidy leads to an increase in total R&D and production; however, it does not lead to the equalization of per firm output and therefore to an efficient distribution of production costs. We also find that privatization of the public firm reduces R&D activity and welfare in the duopoly market. This result stands even when optimal R&D subsidies are provided.     

The dynamics of factors affecting the adoption of innovations

An abundance of IT innovations are constantly struggling for market acceptance. Various models have been proposed in the literature in order to aid understanding of the principles behind the adoption of IT innovations, but most of them implicitly assume that the factors explaining adoption decisions do not change over time. This study challenges that assumption and adds to the existing literature by investigating the dynamics of the factors influencing adoption. Our general proposition is that the driving factors in adopting innovations will change as the diffusion of the innovation in the market progresses. A large-scale empirical study was carried out among medium-sized companies in a variety of European countries and industries concerning the adoption of enterprise resource planning (ERP) software. The findings strongly indicate that the factors affecting late adoption of ERP differ significantly from the factors explaining early adoption. At early stages of the diffusion process adoption tends to be especially driven by a combination of internal strategic drives and attitudes of the firm together with external forces like industry competition and supplier activities. Later on, the mix of adoption stimulating factors seems to be focusing more on implementation issues such as the scalability of the system, the number of seats and the yearly available budget. The study leads to both new methodological insights and substantive conclusions that also have practical implications.     

Effects of Collaborative Communication on NPD Collaboration Results: Two Routes of Influence

Although NPD collaboration with external partners has become the next generation in NPD practice, the discussion concerning how to organize collaboration so as to obtain better results is far from over. Since communication is the most important element in successful interfirm exchange, this study focuses on the impact of collaborative communication and its facets—frequency, formality, reciprocal feedback, and rationality—on NPD collaboration results. In order to explain how collaborative communication can best be managed to enhance NPD collaboration results, this research combines the relational and resource‐based views, proposing the existence of two routes of influence: the direct resource‐based route and the indirect relational route mediated by trust. Using a sample of 207 NPD collaboration projects of innovative firms, empirical findings indicate that reciprocal feedback–rationality and frequency play an important role in product quality and adherence to budget and schedule, respectively, even without trust. Moreover, the trust between partners substantially reinforces the positive influence of reciprocal feedback–rationality on NPD collaboration results and makes the effect of formality significant. Therefore, the two alternative routes are confirmed as important paths to new product success, which provides relevant managerial implications.     

Valuing American-style options under the CEV model: an integral representation based method

Review of Derivatives Research - This article derives a new integral representation of the early exercise boundary for valuing American-style options under the constant elasticity of variance (CEV)...     

Contracting with private rewards

The canonical moral hazard model is extended to allow the agent to face endogenous and noncontractible uncertainty. The agent works for the principal and simultaneously pursues outside rewards. The contract offered by the principal thus manipulates the agent's work–life balance. The participation constraint is slack whenever it is optimal to distort the agent's work–life balance away from life compared to a symmetric-information benchmark. Then, the agent's expected utility is high and he faces flatter incentives. Such contracts may be optimal when the two activities are strong substitutes in the agent's cost function or when reservation utility is low.