Bankruptcy and firm finance

This paper analyzes how an enforcement mechanism that resembles a court affects firm finance. The court is described by two parameters that correspond to enforcement costs and the amount of creditor/debtor protection. We provide a theoretical and quantitative characterization of the effect of these enforcement parameters on the contract loan rate, the default probability and welfare. We analyze agents’ incentive to default and pursue bankruptcy and show that when the constraints that govern these decisions bind, the enforcement parameters can have a sharply non-linear effect on finance. We also compute the welfare losses of “poor institutions” and show that they are non-trivial. The results provide guidance on when models which abstract from enforcement provide good approximations and when they do not.      

Mutual development : Towards new criteria and indicators

The processes of globalization driving restructuring in all countries are harbingers of a new dialogue about paths to development. This development will not be based on the old model of macroeconomic management, but on a broader, systemic view beyond economics—Mutual Development. This article examines a range of social indicators, quality-of-life indicators, and new forms of regional and national accounting, and their applicability in the planning and implementation of Mutual Development based on precepts of grassroots action, cultural diversity, and global sustainability.     

Does private-label production by national-brand manufacturers create discounter goodwill?

Discount stores have a private-label dominated assortment where national brands have only limited shelf access. These limited spots are in high demand by national-brand manufacturers. We examine whether private-label production by leading national-brand manufacturers for two important discounters (one hard and one soft) creates discounter goodwill. We estimate a selection model that is based on a sample of 450 manufacturer-category combinations from two leading discounters (Aldi in Germany and Mercadona in Spain), and we show that private-label production is indeed rewarded: national-brand manufacturers that are involved in such practices have a higher likelihood of procuring shelf presence for their brands. Moreover, while powerful manufacturers are intrinsically more likely to obtain shelf presence with soft discounters, manufacturers with less power can compensate for this by producing private labels. No such dependence on power exists for hard discounters.However, not all national-brand manufacturers are equally likely to produce private labels for discounters. We find that national-brand manufacturers are less likely to do so when: (a) they experience more sales growth, (b) it is more difficult to produce high-quality products in a specific category, (c) they invest more advertising support into their brands, and (d) they introduce more innovations. Moreover, a higher price differential relative to the discounter's private labels makes national-brand manufacturers less likely to engage in private-label production for hard discounters.     

How important are commercial revenues to today's airports?

This paper investigates the importance of commercial revenues to today's airports. It establishes that on average commercial revenues now account for about half of all revenues, although this varies considerably by region and individual airport, with retail being the most significant commercial source. It explores some of the key factors, such as consumer trends, security developments and political changes, which have led to a much more challenging time for commercial managers since the late-1990s. With growing pressure to control levels of aeronautical revenues, even greater focus on commercial revenues may be needed in the future and the paper concludes by discussing the implications of this.     

Network formation models with costs for establishing links

Abstract. In this paper we study endogenous formation of communication networks in situations where the economic possibilities of groups of players can be described by a cooperative game. We concentrate on the influence that the existence of costs for establishing communication links has on the communication networks that are formed. The starting points in this paper are two game-theoretic models of the formation of communication links that were studied in the literature fairly recently, the extensive-form model by Aumann and Myerson (1988) and the strategic-form model that was studied by Dutta et al. (1998). We follow their analyses as closely as possible and use an extension of the Myerson value to determine the payoffs to the players in communication situations when forming links is not costless. We find that it is possible that as the costs of establishing links increase, more links are formed.     

Consumer Socialization and the Role of Branding in Hazardous Adolescent Drinking

This study examines the relationship between alcohol marketing and consumer socialization to alcohol brands (assessed here using aided and unaided brand recognition and brand saliency), and the associated relationship between consumer socialization and hazardous alcohol consumption among a cohort of adolescents surveyed in Scotland. The research addresses gaps in the consumer socialization literature, by examining how marketing influences brand consumer socialization, and how brand consumer socialization influences subsequent hazardous consumption behavior over time, using a robust longitudinal design that assesses causal relationships while controlling for a wide range of important confounding variables. The results demonstrate the contribution of marketing to adolescents’ brand socialization to alcohol and the impact of this socialization on subsequent drinking behaviors. Implications for marketing managers, parents, policymakers, and consumer researchers are discussed, together with suggestions for future consumer research.