On the Equivalence of Ad Valorem Tariffs and Specific Tariffs under Duopoly*

Using a quantity conjectural variation model, this paper examines whether an ad valorem tariff and a specific tariff are equivalent under duopoly. We show that if the average per‐unit import tax is the same for the two tariffs, domestic output will be smaller while foreign output will be larger under an ad valorem tariff. We further show that for any value of a specific tariff, there is a Pareto‐superior ad valorem tariff for all values of conjectural variation except in the case of perfect competition where the two tariffs are equivalent.     

Allocating Ideas: Horizontal Competition in Tournaments

We develop a stylized model of horizontal and vertical competition in tournaments with two competing firms. The sponsor cares not only about the quality of the design but also about the design location. A priori not even the sponsor knows his preferred design location, which is only discovered once he has seen the actual proposals. We show that the more efficient firm is more likely to be conservative when choosing the design location. Also, to get some differentiation in design locations, the cost difference between contestants can be neither too small nor too big. Therefore, if the sponsor mainly cares about the design location, participation in the tournaments by the two lowest-cost contestants cannot be optimal for the sponsor.     

Employability and the psychological contract in European ICT sector SMEs

This article explores the employability of information and communication technology (ICT) professionals from the perspective of small- and medium-sized enterprises (SMEs). The first stage of analysis, based on over 100 interviews with managers of ICT supplier companies in seven European countries (Germany, Greece, Italy, the Netherlands, Norway, Poland and the UK), showed most SMEs to have a generally ad hoc approach to managing the employability of their ICT professionals. Assessment and development plans were used primarily to keep skills current to business needs; however, the more developed northern European markets showed greater awareness of the ‘high commitment’ benefits of a more sophisticated approach towards career management (e.g. through mentoring or career planning). A second stage of analysis based only on UK interviews builds on this to propose a model of positive employer influence on psychological contracts through career and employability management practices.     

Optimal portfolios with minimum capital requirements

We propose a novel approach to active risk management based on the recent Basel II regulations to obtain optimal portfolios with minimum capital requirements. In order to avoid regulatory penalties due to an excessive number of Value-at-Risk (VaR) violations, capital requirements are minimized subject to a given number of violations over the previous trading year. Capital requirements are based on the recent Basel II amendments to account for the ‘stressed’ VaR, that is, the downside risk of the portfolio under extreme adverse market conditions. An empirical application for two portfolios involving different types of assets and alternative stress scenarios demonstrates that the proposed approach delivers an improved balance between capital requirement levels and the number of VaR exceedances. Furthermore, the risk-adjusted performance of the proposed approach is superior to that of minimum-VaR and minimum-stressed VaR portfolios.     

The role of transformational leadership,emotional intelligence,and group cohesiveness on leadership emergence

The concept of emotional intelligence and its connections with other important psychological constructs have been the focus of a wide range of current research (see Mestre & Fernández‐Berrocal, 2007, and Salovey, Woolery, & Mayer, 2001, for reviews). Yet the relationship between emotional intelligence and transformational leadership, a leadership style that is highly correlated with efficiency and satisfaction of the leaders' followers, has scarcely been analyzed. We hypothesize that individuals who score high in emotional intelligence emerge as leaders more easily than low‐emotional‐intelligence individuals due to the fact that they are more transformational in their leadership style. We further suggest that this is especially the case in highly cohesive groups. In this study, we test these ideas and find empirical support for our hypotheses.     

Differentiated industries without entry barriers

Our objective is to predict the evolution of an industry without entry barriers where products are differentiated on the basis of quality. Each firm chooses a single brand whose characteristics and amount of production is determined by the firm. The analysis suggests two different stages in the evolution. The first is a stage of growth and the second is a stationary stage in terms of aggregate production. While during the first stage the entry of additional brands results in the reduction of average quality, during the second stage entry leads to increased average quality. Hotelling's principle of “minimum differentiation” is contradicted in the model.