Public Subsidies and the Location and Pricing of Sports

Using public choice analysis, we determine how government subsidies affect location and pricing decisions of sports teams. We explain how voter referendums can create suboptimal outcomes for local communities and identify winners and losers in sport team subsidies. Subsidy bidding leads to higher subsidies and fewer sport franchises but does not alter team location. Sport subsidies generate additional revenue for owners and players at taxpayer expense, and non‐fan taxpayers subsidize both the team and fans. To increase political support for subsidies, teams lower ticket prices below the apparent profit‐maximizing level, which may cause inelastic ticket prices and ticket shortages.     

The influence of voice and explanation on performance in a participative budgeting setting

This paper examines the relationship between the use of a fair budgeting process and subordinate performance. Organizational justice theory is used to define a fair budgeting process as having two components: the subordinate’s involvement in the budgeting process, voice; and the communication of a rationale for the subordinate’s lack of influence over the final budget target the superior sets, explanation. Results indicate significant performance improvements when voice and explanation are combined as compared to voice alone.     

Bach Music Inc.: Impact of Price Pressure,Capacity Constraints,and a Special Order on Management Decision Making

This case has been developed for an introductory management accounting course at the undergraduate and MBA levels. Although the setting is relatively simple, it illustrates several management accounting issues that are relevant to firms of every size that produce a product or service under competitive pressures and capacity constraints. The case also integrates several topics that are often viewed as abstract by the students. Specifically, it deals with the concepts around cost‐volume profit analysis in a realistic environment, the tension between short‐term and long‐term decisions, discounted cash flow analysis, the impact of managerial incentives and compensation on decision making and the impact of operating leverage on profitability. The case was used successfully several times in an introductory course at the MBA level. Surveys of the students reveal that the case has contributed significantly to their learning and has clarified the concepts introduced in the case.     

The five competitive forces that shape strategy

In 1979, a young associate professor at Harvard Business School published his first article for HBR, "How Competitive Forces Shape Strategy." In the years that followed, Michael Porter's explication of the five forces that determine the long-run profitability of any industry has shaped a generation of academic research and business practice. In this article, Porter undertakes a thorough reaffirmation and extension of his classic work of strategy formulation, which includes substantial new sections showing how to put the five forces analysis into practice. The five forces govern the profit structure of an industry by determining how the economic value it creates is apportioned. That value may be drained away through the rivalry among existing competitors, of course, but it can also be bargained away through the power of suppliers or the power of customers or be constrained by the threat of new entrants or the threat of substitutes. Strategy can be viewed as building defenses against the competitive forces or as finding a position in an industry where the forces are weaker. Changes in the strength of the forces signal changes in the competitive landscape critical to ongoing strategy formulation. In exploring the implications of the five forces framework, Porter explains why a fast-growing industry is not always a profitable one, how eliminating today's competitors through mergers and acquisitions can reduce an industry's profit potential, how government policies play a role by changing the relative strength of the forces, and how to use the forces to understand complements. He then shows how a company can influence the key forces in its industry to create a more favorable structure for itself or to expand the pie altogether. The five forces reveal why industry profitability is what it is. Only by understanding them can a company incorporate industry conditions into strategy.     

Fair imposition

We introduce a new mechanism-design problem called fair imposition. In this setting a center wishes to fairly allocate tasks among a set of agents whose cost structures are known only to them, and thus will not reveal their true costs without appropriate incentives. The center, with the power to impose arbitrary tasks and payments on the agents, has the additional goal that his net payment to these agents is never positive (or, that it is tightly bounded if a loss is unavoidable). We consider two different notions of fairness that the center may wish to achieve. The central notion, which we call k-fairness, is in the spirit of max-min fairness. We present both positive results (in the form of concrete mechanisms) and negative results (in the form of impossibility theorems) concerning these criteria. We also briefly discuss an alternative, more traditional interpretation of our setting and results, in the context of auctions.     

Repugnance for “menial jobs”

A man's sense of well-being and meaningfulness in work is not so much a matter of external circumstances—the kind of job he has—as it is of his deepdown belief that he is a worthy human being. If he lacks that, any job can seem dissatisfying and “menial.” Executives may suffer from this (or related behaviors) as much as assembly-line workers.     

An experimental examination into the design of decentralized methods to solve the assignment problem with and without money

Summary An experimental examination of the assignment problem, matching individuals to positions or slots, is conducted in which various assignment mechanisms are analyzed. Generalized versions of both the Vickrey and English auctions are designed to solve the assignment problem along with oridinal ranking mechanisms (serial dictator and funny money system). The generalized auctions result in efficient allocations. In contrast, the ordinal ranking mechanisms, which require no monetary transfers, are significantly less efficient in their assignments. However, the efficient allocations obtained from the competitive bidding processes are at the expense of consumers' surplus since demanders retain significantly larger profits with the ordinal ranking mechanisms.     

Evaluation designs for technology assessments and forecasts

The worth of technology assessments and technological forecasts need not remain a matter of faith; indeed, it cannot. Evaluation of technology assessments and forecasts is indicated both to assess their effectiveness and to provide feedback useful for improving the state of the art. Drawing upon evaluation research, we present a range of alternative evaluation designs that fit into four general categories; pre-planned or post-hoc evaluations of single studies; pre-planned or post-hoc comparisons among multiple studies. We distinguish among three classes of performance objectives meriting evaluative attention: validity, utility, and advancement of the methodological art. For each objective we in turn consider pros and cons of several specific evaluation designs. We conclude with recommendations for two coordinated, but selective, evaluation programs, one focused on comparison among extrapolative forecasting techniques and one devoted to certain aspects of technology assessment methods and utilization.     

Bidding rings and the winner's curse

This article extends the theory of legal cartels to affiliated private value and common value environments. We show that efficient collusion is always possible in private value environments, but may not be in common value environments with a binding reserve price. In the latter case, collusion does more than simply transfer rents from the seller to the buyers, it also gives buyers a chance to pool their information prior to trade and make an efficient investment decision. However, full efficiency may not be compatible with information revelation. Buyers with high signals may be better off if no one colludes, leading to inefficient trade. This result provides a possible explanation for the low incidence of joint bidding, especially on marginal tracts, in U.S. federal government offshore oil and gas lease auctions.