The Division of Labor, Inequality and Growth

We present a model that links the division of labor and economic growth with the division of wealth in society. When capital market imperfections restrict the access of poor households to capital, the division of wealth affects individual incentives to invest in specialization. In turn, the division of labor determines the dynamics of the wealth distribution. A highly concentrated distribution of wealth leads to a low degree of specialization, low productivity, and low wages. In that case workers are unable to accumulate enough wealth to invest in specialization. Hence, in a highly unequal society, there is a vicious cycle in which the degree of specialization, productivity and wages stay low, wealth and income inequality stays high and the economy stagnates. By contrast, greater equality increases investment in specialization and leads to a greater division of labor and higher long run development.     

Understanding the Inputs into Innovation: Do Cities Substitute for Internal Firm Resources?

We examine whether there is a trade-off between employing internal (firm) resources and purchased external (local) resources in process innovation. We draw on a rich dataset of Internet investments by 86,879 US establishments to examine decisions to invest in advanced Internet technology. We show that the marginal contribution of internal resources is greater outside of a major urban area than inside one. Agglomeration is less important for firms with highly capable IT workers. When firms invest in innovative processes they act as if resources available in cities are partial substitutes for both establishment-level and firm-level internal resources.     

Strategic groupings as competitive benchmarks for formulating future competitive strategy: A modelling approach

Previous studies on strategic groups have examined issues such as the identification of strategic groups, the relationship between strategic groups structure and industry performance, and the movement of strategic groups over time. In contrast to previous studies, this paper uses the analytical concepts of game theory to explore the question of what strategic groups will exist in the future. These benchmark (future) strategic groups represent long-run strategic positions available within an industry and thus reference points for firms in developing sustainable competitive strategies. The benchmark strategic groups are discussed and comments are offered to illustrate how firms can use the benchmark information to redirect their strategic positions in order to survive and remain competitive in the long run.     

A model of decision making in an ecologically realistic environment: Relative comparison and the Independence of Irrelevant Alternatives

Models of behavior in a variety of areas often assume that decision-makers will adhere to the axioms of economic rationality. This requires that outcomes can be assigned objective values by stable evaluation frameworks. Yet both human and animal behavior is often not economically rational. Instead relative comparison of options is often used to assess value. We are interested in conditions that might lead natural selection to favor relative comparison of options over behavior that is consistent with the axioms of rationality. We compare an economically rational strategy with a relative comparison strategy (trade-off contrast). We model these strategies in a simple environment where decisions are multi-period; there is stochastic fluctuation in the choices available at any given time; and uncertainty about what choices will be available in the future. We investigate five levels of interaction between the attributes of the options that range from perfect complementarity to perfect substitutability. Our results show that, for some of the parameter space, a non-rational strategy achieved higher fitness than an economically rational strategy and that these differences were large enough to be biologically significant.     

How do firms make money selling digital goods online?

We review research on revenue models used by online firms who offer digital goods. Such goods are non-rival, have near zero marginal cost of production and distribution, low marginal cost of consumer search, and low transaction costs. Additionally, firms can easily observe and measure consumer behavior. We start by asking what consumers can offer in exchange for digital goods. We suggest that consumers can offer their money, personal information, or time. Firms, in turn, can generate revenue by selling digital content, brokering consumer information, or showing advertising. We discuss the firm’s trade-off in choosing between the different revenue streams, such as offering paid content or free content while relying on advertising revenues. We then turn to specific challenges firms face when choosing a revenue model based on either content, information, or advertising. Additionally, we discuss nascent revenue models that combine different revenue streams such as crowdfunding (content and information) or blogs (information and advertising). We conclude with a discussion of opportunities for future research including implications for firms’ revenue models from the increasing importance of the mobile Internet.     

The construction of an international investors' perception model for corporate published forecasted financial reports for the USA,the UK and New Zealand

Although the utility of corporate published forecasted financial reports to investors has been investigated, the findings are inconclusive. These inconclusive findings may have resulted from the ambiguity of defining the forecasted financial reports or its components. The clarification of the definition of forecasted financial reports or its components is the main objective of the present study. In addition, an investor's utility function is used to measure the utility of such reports for investors regarding the entire forecasted financial reports or their components.     

ON THE REVISITED ILLYRIAN MODEL AND PERVERSITY: THE CASE OF THE LONG-RUN1

The modified theory of the Illyrian firm was developed, in part, to correct a perversity exhibited by the traditional theory of the Illyrian firm — that output rises in response to a fall in output price or a rise in fixed costs. We show that while this revised model has solved the problem for the short-run the problem remains in the long-run, and this long-run perversity may have important policy implications for the short-run as well. We also show that the under-production problem associated with the traditional LMF is mitigated (and perhaps even reversed) in the modified LMF.