Increases in poverty in South Africa, 1999–2002

Analysis of the results in the 1999 October Household Survey and the 2002 Labour Force Survey suggests that the number of people in the bottom two expenditure classes (R0–R399 and R400–R799 per household per month) increased by about 4,2 million over the period. As the boundaries of these expenditure classes remained constant in nominal terms, there is a likelihood that the number of people in poverty will have increased as well. This article attempts to discover whether this is indeed the case. The possible increase in the number of people in poverty is not equal to the increase in the number of people in these two expenditure categories. Rather, it is equal to the difference between the numbers of people in poverty in the two years. Our first crude estimate of the maximum potential number of ‘new’ poor suggests that it could be as high as 4,5 million. This estimate, which excludes any adjustments for possible underreporting of expenditure, child cost economies and household economies of scale, and the ‘social wage’, is whittled down as we attempt to make the relevant allowances. Responding to claims that poverty is increasing in the country, the government has pointed to a failure to consider the contribution of the social wage to the alleviation of poverty. Accordingly, we have also attempted to estimate the impact of the social wage.     

Mergers in the food retailing sector: An empirical investigation

We address the problem of merger evaluation, for competition policy purposes, in the retailing sector. The likely effects of a possible merger are analysed ex ante. The novelty of the paper lies in the inclusion of downstream and upstream market power effects on the retailers. Also, it provides an empirical application to the Portuguese food retailing market. The effects of additional concentration on prices are estimated, as well as the price reduction insiders are likely to obtain via an improved bargaining position. The final effect on prices depends on how these cost reductions are reflected in insiders’ prices, i.e., on the pass-through rate. For realistic values of this rate we find that the merger in question will most likely increase consumer prices and, therefore, should not be allowed on an antitrust legislation basis.     

Evaluating an Alternative Risk Preference in Affine Term Structure Models

Dai and Singleton (2002) and Duffee (2002) show that there isa tension in affine term structure models between matching themean and the volatility of interest rates. This article examineswhether this tension can be solved by an alternative parametrizationof the price of risk. The empirical evidence suggests that,first, the examined parametrization is not sufficient to solvethe mean-volatility tension. Second, the usual result in theestimation of affine models, indicating that some of the statevariables are extremely persistent, may have been caused bythe lack of flexibility in the parametrization of the priceof risk.     

Production Chains and Linkage Indicators

This paper uses a framework of production chains, which emerge from the vertical integration processes, in order to propose a general definition of linkage indicators. This definition is based on blocks of sectors and offers, among others, the following advantages. A reduction in the aggregation requirement, the resolution of the problems associated with the so-called distribution matrices, an easier analysis of the linkage components and, finally, the possibility to shed light on the links between Hypothetical Extraction Methods and sectoral analyses. Moreover, because of its general form, it helps to identify analogies between different types of indicators.     

Preemptive mergers under spatial competition

Mergers for market power generally benefit outsider firms more than participating firms. Hence, outsiders should welcome such mergers between their competitors but, frequently, this is not the case. Under spatial competition some outsiders gain more than the participating firms but others might benefit less. Thus, if the number of admissible mergers is limited, firms may decide to merge to preempt rival mergers. This paper studies the incentives for preemptive merger by firms engaged in spatial competition.     

Institutional lending to knowledge-based businesses

Knowledge-based businesses (KBBs) are vital to economic development and revitalization in many regions, especially in areas that have experienced a decline in traditional industries. While much attention has been devoted to various aspects of traditional small firm financing, there is a paucity of empirical research to explain how new knowledge-based firms are externally financed. The current study researches institutional strategies, structures and risk assessment practices of chartered banks and government agencies in a peripheral region of Canada. It examines the extent to which these institutions have modified traditional lending approaches and practices to meet the needs of knowledge-based firms. The study explores the existence of institutional lending cultures through an empirical investigation of risk assessment practices employed by account managers.Two business proposals, one for a knowledge-based firm and one for a more traditional firm, were presented to account managers in chartered banks and government agencies for initial review and subsequent due diligence and risk assessment. Verbal protocols and interview data obtained at three stages of the due diligence process were analyzed using standard multivariate techniques and consensus analysis (CA). CA, a tool developed to measure cultural agreement in cognitive anthropology, was employed to assess the level of agreement among lenders with respect to risk assessment.Overall, the study findings confirm that specialized strategies, structures and processes for lending to KBBs are only partially developed, are still evolving and are considerably diverse in both the banking and government sectors. Furthermore, the level of agreement among lenders develops during the course of the due diligence process. Results confirm consensus and the existence of a lending culture sensitive to the needs of KBBs among a select but important subgroup, knowledge-based lending specialists. The paper discusses the implications of these findings for researchers, entrepreneurs in search of capital and policy makers seeking to develop new business opportunities for regional economic development.     

The Internationalization Strategy of Spanish Indigenous Franchised Chains: A Resource‐Based View*

In this paper, we identify characteristics of Spanish franchised chains that favor the adoption of an internationalization strategy and those that have a negative influence from a resource‐based perspective. Data used were drawn from Annual Franchise Guidebooks published in Spain for 2005. Various independent variables were taken into account and the final sample included 316 Spanish franchised chains. In order to detect relevant differences between chains with some degree of internationalization and those that only operate in the Spanish domestic market, we conducted a discriminant analysis to discover which of the independent variables contributed significantly to a correct classification of chains to their corresponding group (those that have chosen to spread activities abroad and those that have not).     

Identification in nonparametric limited dependent variable models with simultaneity and unobserved heterogeneity

We extend the identification results for nonparametric simultaneous equations models in Matzkin (2008) to situations where the observations on the vector of dependent variables might be limited, and where the number of exogenous unobservable variables is larger than the number of dependent variables.     

The Shrinking Hand: Why Information Technology Leads to Smaller Firms

We explain the firm downsizing trend of the recent decades by the new abundance of information – the ICT revolution. Production processes differ in their information requirements: while decentralized production by means of market exchanges is information intensive, less information per unit of output is needed in the hierarchically integrated production of firms, and the information/output ratio is decreasing firm size.

We formulate a quantity of information theory of the firm embodying these differences and derive a Coase–Rybczinski effect for the aggregate economy, which predicts a decreasing employment share of large firms and an increasing share of small ones when the aggregate quantity of information increases Panel data regressions and other evidence provide support for this hypothesis.     

Promotional efforts of muscadine wines and muscadine‐related products: the case of southern United States wineries

Muscadine grapes are native to the southern United States, where they have been grown and consumed for generations. Apart from extensive coverage provided in scientific research concerning their healthy properties, to date very little has been researched about other areas of the muscadine grapes, muscadine wines and related products. For example, in an era when the ‘local’ aspect of foods can have a strong impact on both consumers and food growers, very little has been researched from an entrepreneurial, marketing and (wine) tourism perspective. In this context, academic literature investigating winery operators' efforts in promoting and selling muscadine products through the cellar door is almost inexistent. The present study examines this area from the perspective of 31 operators of family‐run wineries located in several southern states. The findings demonstrate agreement among respondents about the critical need to promote the ‘local’ aspect of muscadine wines, as well as other value‐added muscadine products. Some operators refer to the need to support local/state farmers following ‘buy local’ slogans, while others are reacting at consumers' demands for local products. Arguably, as more muscadine wineries are established in some of the southern states, muscadine wines may become more popular and more accepted by mainstream consumers. However, muscadine winery operators are confronted by several challenges such as the lack of resources and support to invest in or expand their promotional efforts; in some cases, state legislation prevents operators from distributing their products outside the cellar door. With so many wines and other beverages consumers can find in retail stores and in the hospitality industry today, the strengthening of current promotional efforts at the cellar door and introducing consumers to a relatively unknown local product (as compared with Vitis vinifera wines) become critical for southern winery operators.