‘DUAL’ GRAVITY: USING SPATIAL ECONOMETRICS TO CONTROL FOR MULTILATERAL RESISTANCE

We derive a quantity‐based structural gravity equation system in which both trade flows and error terms are cross‐sectionally correlated. This system can be estimated using techniques borrowed from the spatial econometrics literature. To illustrate our methodology, we apply it to a well‐known Canada–US trade dataset. We find that border effects between the USA and Canada are smaller than suggested by previous studies: about 7.5 for Canadian provinces and about 1.3 for US states. Hence controlling directly for cross‐sectional interdependence among both trade flows and error terms reduces measured border effects by capturing ‘multilateral resistance’. Copyright © 2010 John Wiley & Sons, Ltd.     

Agglomeration and clusters: Tools and insights from coagglomeration patterns

Geographic clusters have received first‐order policy attention despite our limited academic knowledge about them. I explain how coagglomeration patterns of industries can inform the analysis of clusters by allowing us to better delineate them; to explore the causal mechanisms underlying them; and to more finely assess their impact on various economic outcomes.     

General equilibrium models of monopolistic competition: A new approach

We analyze a class of ‘large group’ Chamberlinian monopolistic competition models by applying different concepts of functional separability to the same set of first-order conditions for utility maximization. We show that multiplicatively quasi-separable (MQS) functions yield ‘constant relative risk aversion’ (CRRA), and, therefore ‘constant elasticity of substitution’ (CES), functions, whereas additively quasi-separable (AQS) functions yield ‘constant absolute risk aversion’ (CARA) functions. We then show that the CARA specification sheds new light on: (i) pro-competitive effects, i.e., profit-maximizing prices are decreasing in the mass of competing firms; and (ii) a competitive limit, i.e., profit-maximizing prices converge to marginal costs when the mass of competing firms becomes arbitrarily large.     

Refining the debate on GM crops using technological foresight—the Danish experience

Rapid developments in and the controversial nature of biotechnology call for communication, networks, partnerships, and collaboration in research, not just among researchers, but also between researchers and research “users” in industry, government, and elsewhere. Technological foresight appears to offer a coordinating method for developing and strengthening those linkages. To test this, a technological foresight study was performed on genetically modified (GM) crop technology in the Danish context. The background of the study was the conflict and intense debate in Denmark over applications of gene technology, especially over the deliberate release of genetically modified (GM) crops. However, the current debate characteristically involves sharply opposed fronts, lacking willingness and courage to engage in a free-flowing and open-minded debate on both rational and normative components of biosafety. In it, stakeholders and experts on both side of the conflict advocate widely differing opinions. Without a proper generally intelligible dialogue, the broader public audience finds it hard to comprehend this type of debate. The study pursues the notion that public dialogue can act as a driver of future applications in the technological domain, specifically GM crops. The study concluded with a stakeholder workshop that revealed three key issues that might provide helpful starting points for a more free-flowing and open-minded debate about the future of GM crops. The issues were those arising from the following statements: a broad perspective on risk is crucial; international regulation must make allowance for developing countries; a better configuration of the risk debate is needed. These issues are discussed in more details in the article.     

How to build a strategic network: A practitioner-oriented process model for the ICT sector

One critical success factor for the future will be the ability to build and develop strategic networks. This ability is especially vital in the dynamic information and communication technology (ICT) sector, where the development of competitive offerings often requires a coalition of platform and service providers. However, the academic literature has yet to propose a systematic managerial tool for the strategic network building process. Our distinctive contribution is the development of a practitioner-oriented process model for building a strategic network, which is linked to the resource-based view and the value creation system approach. Moreover, we suggest that instead of being a sequential stage-wise process, the construction of a strategic network can be divided into parallel, although not necessarily simultaneous, sub-processes based on the required value activities in the entire business concept. The resulting network-building model is used to provide managerial suggestions for the efficient construction of strategic business networks.     

Analyst Report Readability

Using an extensive database of 356,463 sell‐side equity analysts' reports from 2002 to 2009, this study is one of the first to analyze the readability of analysts' reports. We first examine the determinants of variations in analyst report readability. Using several proxies for ability, we show that reports are more readable when issued by analysts with higher ability. Second, we test the relation between analysts' report readability and stock trading volume reactions. We find that trading volume reactions increase with the readability of analysts' text, consistent with theoretical models that predict that more precise information (and hence more informative signals) results in investors' initiating trades. These results support the view that the readability of analysts' reports is important to analysts and capital market participants.     

Planning Reform and Housing Costs: Why The Coalition Failed and What it Means

Housing costs in the UK have exploded in recent decades. Contrary to what is often claimed, this has nothing to do with population density, demographics or a lack of public housing. A review of the empirical literature shows that the key determinant of housing costs is the severity of planning restrictions. Faced with a well‐organised NIMBY opposition, the coalition failed in its attempt to make the planning system more development‐friendly. This is not surprising, because the current system provides incentives which make NIMBYism a rational option. The coalition ought to address these incentives rather than trying to sidestep them.     

John Rawls’ Concept of the Reasonable: A Study of Stakeholder Action and Reaction Between British Petroleum and the Victims of the Oil Spill in the Gulf of Mexico

Journal of Business Ethics - In his political philosophy, John Rawls has a normative notion of reasonable behaviour expected of citizens in a pluralist society. We interpret the various strands of...     

DIFFUSION MODELS FOR EXCHANGE RATES IN A TARGET ZONE

We present two analytically tractable diffusion models for an exchange rate in a target zone. One model generalizes a model proposed by De Jong, Drost, and Werker (2001) to allow asymmetry between the currencies which is often an important feature of data. Estimation of the model parameters by the method of Kessler and Sørensen (1999) using eigenfunctions of the generator is investigated and shown to give well-behaved estimators that are easy to calculate. The method is well suited to the models because the eigenfunctions are known so that explicit estimating functions are obtained, and because the state space is a finite interval, for which it is known that the method can be made arbitrarily efficient by including sufficiently many eigenfunctions. The model fits data on exchange rates in the European Monetary System well. In particular, the asymmetry parameter is significantly different from zero for three out of four currencies. An alternative diffusion model is presented with similarly nice properties, but with different dynamics that allow constant volatility near the boundaries of the target zone. No-arbitrage pricing of derivative assets is considered, and the effect of realignments is briefly discussed.