Social Networks and Business Success

A bstract .   The main objective of this paper is to illuminate social and cultural preconditions for networking and success in business in an African context. By in-depth studies of small-scale entrepreneurs in the wood business in Tanzania, we find that people belonging to an Asian subculture probably have a better standing for entering and thriving in business, due to group cohesion, mobility, and level of education. Through high-quality social networks, characterized by a high number and variety of relations, certain groups seem to be in a better position to enact their business environment and raise entrepreneurial resources such as motivation and ideas, information, capital, and trust. To reduce social discontent and inter-ethnic and religious conflicts in this area, we suggest that policy measures be taken to enhance levels of education and access to information for all citizens to create a "level playing field" in economic affairs.     

VAPORWARE*

It is a widely adopted practice for firms to announce new products well in advance of actual market availability, especially in the computer industry. In this article, a firm makes pre‐announcements on its product, which are “cheap talk.” We develop a reputation model of “vaporware” where the product pre‐announcement can partially convey information about the product's quality. We discuss its implications for social welfare.     

Asymmetric firms,technology sharing and R&D investment

We use a combination of theory and experiment to study the incentives for firms to share knowledge when they engage in research and development (R&D) in an uncertain environment. We consider both symmetric and asymmetric starting points with regards to the amount of initial knowledge firms have before conducting R&D and look at how differences in starting positions affect the willingness of firms to share knowledge. We investigate when and if firms find R&D cooperation beneficial and how investment in R&D is affected by the outcome of the sharing decisions. The experimental evidence shows that overall subjects tend to behave consistently with theoretical predictions for the sharing of knowledge, although leaders who are not compensated by a side payment from laggards are more willing to share than predicted by the theory, and leaders who are compensated are less willing. The data on investment suggests less investment with sharing than without, consistent with theory. Compared to exact numerical predictions, there is overinvestment or underinvestment except for symmetric firms under no sharing. All cases of overinvestment and underinvestment, regardless of sharing or not and regardless of starting positions, are well explained by smoothed-out best (quantal) responses.     

A Merchant Mechanism for Electricity Transmission Expansion

We propose a merchant mechanism to expand electricity transmission based on long-term financial transmission rights (FTRs). Due to network loop flows, a change in network capacity might imply negative externalities on existing transmission property rights. The system operator thus needs a protocol for awarding incremental FTRs that maximize investors’ preferences, and preserves certain currently unallocated FTRs (or proxy awards) so as to maintain revenue adequacy. In this paper we define a proxy award as the best use of the current network along the same direction as the incremental awards. We then develop a bi-level programming model for allocation of long-term FTRs according to this rule and apply it to different network topologies. We find that simultaneous feasibility for a transmission expansion project crucially depends on the investor-preference and the proxy-preference parameters. Likewise, for a given amount of pre-existing FTRs the larger the current capacity the greater the need to reserve some FTRs for possible negative externalities generated by the expansion changes.     

Regulation of Location-Specific Externalities from Small-Scale Polluters

Environmental and Resource Economics - Emission damages caused by small-scale polluters such as farms, vehicles, homes and small businesses are often location-specific and such polluters are often...