Revenue Sharing and Vertical Control in the Video Rental Industry

Revenue sharing contracts, in which retailers pay a royalty on sales to their suppliers, are now widely used in the video rental industry. We show that revenue sharing is valuable in vertically separated industries in which demand is either stochastic (unpredictable) or variable (e.g., systematically declining), downstream inventory is chosen before demand is realized and downstream firms engage in intrabrand competition. Unlike two-part tariffs, revenue sharing achieves the first best outcome by softening retail price competition without distorting retailers' inventory decisions. Our theories are also consistent with trends in prices and availability following retailers' adoption of revenue sharing contracts.     

A Dynamic Double-Trigger Model of Multifamily Mortgage Default

This study advances the commercial mortgage literature by providing theory and methods for incorporating both equity and cash-flow considerations in default models. We use local market conditions to compute a (joint) probability that default is in-the-money, based on both equity and cash-flow considerations. Statistical analysis is performed using data on multifamily mortgages originated in the 1980s and early 1990s. Simulations based on statistical modeling show advantages of the probabilistic double-trigger approach over other measures of equity and cash flow.     

Gross national accumulation

Low birth rates, longevity, family disintegration, and other factors have reduced the size of the average household. At the same time household size is shrinking, new housing offers twice the floor space per occupant of old housing. Small households are inefficient users of space, utilities, furniture, and equipment. As these factors converge, the result is over consumption of durables and vast stockpiles of possessions just awaiting disposal when the baby boom generation passes on. The rightful heirs to these possessions are themselves accumulators, and will most likely have little use for what is left to them. What does the future hold for consumption, savings, and demand for housing? Booming flea markets, bigger homes as warehouses, a decline in consumption, or an epidemic of display and collection? Public policies have limited leverage on private behavior.     

The ethical leader: An ascetic construct

The way in which ethical standards are neglected or applied is a function of individual character. The best guarantee of ethical leadership, therefore, lies in the identification of those already predisposed to live according to high moral standards. The ascetic construct is offered as a type of personality with such a predisposition. The ascetic is self-controlled, purposeful, and mindful with regard to consequences. The character traits of the ascetic leader are predicted to increase ethical awareness and ethical accountability within his organization or hers. This will increase the probability of the organization's economic success because it will reduce uncertainty on the part of customers and investors. A better understanding of the ascetic personality may be helpful in identifying those with the potential for becoming highly ethical leaders.Harold Jones is a graduate of the University of Nebraska at Omaha and Garrett Theological Seminary. After eight years in the ministry, he worked for twelve years as a stockbroker and as a branch office manager for an affiliate of a New York Stock Exchange member firm. In 1992, he retired from business to begin working on his Ph.D.     

Decomposing hospital productivity changes, 1985–1988: A nonparametric Malmquist approach

Annual data on U.S. hospitals from 1985–1988 are evaluated by ownership type—profit, nonprofit, state and local government, and U.S. Department of Veterans Affairs (VA)—for changes in hospital productivity over time. Distance functions are used to measure Malmquist indices of productivity change, which are then decomposed into indices of efficiency change and technology change. In contrast to previous studies using this approach, we allow for variable returns to scale and use both input and output orientations. We find that changes in technology dominate changes in inefficiency in determining changes in productivity.     

DOES GNP EXAGGERATE GROWTH IN “ACTUAL” OUTPUT? THE CASE OF THE UNITED STATES

Measures of national product can be misleading because there is nonmarket production. There are also distortions due to transactional activities, which are expenditures to support transactions, not actual output consumed. For 1950–89, this study recalculates output for the United States, adjusting for transactional activities and nonmarket production. Due to relatively rapid growth in transactional activities, GNP overstates output growth in the 1950s; because there was slow expansion of transactional activities in the early 1970s, GNP understates actual output. Since 1974, increases in transactional activities and shifts to market production lead GNP to exaggerate improvement of "actual" output per capita.     

THE RELATIONSHIP BETWEEN FINANCIAL PERFORMANCE AND STOCK MARKET BASED MEASURES OF CORPORATE DIVERSIFICATION

This study examines the relationship between corporate diversification and financial performance. The use of a stock market based measure of diversification allowed a much larger database than in previous studies and overcame the subjective nature of measuring internal diversification. Because previous researchers found that firm size affected performance, size was controlled in this analysis. The authors conclude that there is no statistically significant relationship between the degree of internal diversification and financial performance.     

Falling Behind and Catching Up in a Model of North-South Trade

This paper analyzes a formal, dynamic model of the center-periphery problem. The model features falling relative demand for agricultural goods, a higher rate of technical change in manufacturing, and a quality-differentiated manufactured good. Income differences imply a potential for intra-industry trade, while technical change generates product cycle type results. The main insight is that a closing of the North-South technology gap does not necessarily imply catching up, because of the falling relative demand for agricultural goods. The South catches up only if it exports lower-quality varieties of the manufactured good and closes the technology gap.