Asymmetric Collusion with Growing Demand

We characterize collusion sustainability in markets where demand growth triggers the entry of a new firm whose efficiency may be different from the efficiency of the incumbents. We find that the profit-sharing rule that firms adopt to divide the cartel profit after entry is a key determinant of the incentives for collusion (before and after entry). In particular, if the incumbents and the entrant are very asymmetric, collusion without side-payments cannot be sustained. However, if firms divide joint profits through bargaining and are sufficiently patient, collusion is sustainable even if firms are very asymmetric.     

Measuring the persistence in innovation in Spanish manufacturing firms: empirical evidence using discrete-time duration models

This paper measures the level of persistence in innovation using a large representative sample of Spanish manufacturing firms for the period 1990–2008. We determine survival in innovation activities using discrete-time duration models, which control for some of the existing problems in the continuous-time duration models used in previous studies (namely, unobserved heterogeneity and the proportional hazards assumption). This paper examines the relationship between the firm-specific characteristics of technological regimes and the persistence measured by innovative spells at the firm level. The results show that high technological opportunities, patents, cumulativeness of learning based on previous experience and accumulated R&D, as well as the use of generic knowledge provided by universities enhance persistence in innovative activity.     

Relocation and investment in R&D by firms

The literature on foreign direct investment has analyzed corporate location decisions when firms invest in R&D to reduce production costs. Such firms may set up new plants in other developed countries while maintaining their domestic plants. In contrast, we here consider firms that close down their domestic operations and relocate to countries where wage costs are lower. Thus, we assume that firms may reduce their production costs by investing in R&D and likewise by moving their plants abroad. We show that these two mechanisms are complementary. When a firm relocates it invests more in R&D than when it does not change its location and, therefore, its production cost is lower in the first case. As a result, investment in R&D encourages firms to relocate.     

Does Corruption Have Social Roots? The Role of Culture and Social Capital

The aim of this work is to analyse the influence of sociocultural factors on corruption levels. Taking as starting point Husted (J Int Bus Studies 30:339–359, 1999) and Graeff (In: Lambsdorff J, Taube M, Schramm M (eds) The new institutional economics of corruption. Routledge, London, 2005) proposals, we consider both the interrelation between cultural dimensions and the diverse expressions of social capital with corruption. According to our results, the universalistic trust (linking and bridging social capital) constitutes a positive social capital that is negatively linked to corruption. In contrast, the particularistic levels of trust (bonding) can constitute a negative social capital directly related to corruption levels. Furthermore, cultures which are favourable to the legitimation of dependency relations and the formation of closed particularistic groups (power-distance and community factors) create a breeding ground for the development of these amoral rent-seeking structures.     

Monopolistic Competition and Different Wage Setting Systems

In this paper, we present a disequilibrium unemployment model without labor market frictions and monopolistic competition in the goods market within an infinite horizon model of growth. We consider different wage setting systems and compare wages, the unemployment rate, and income per capita in the long‐run at firm, sector, and national (centralized) levels. The aim of this paper is to determine under which conditions, the inverted‐U hypothesis between unemployment and the degree of centralization of wage bargaining, reported by Calmfors and Driffill [Economic Policy, 6, 14–61, 1988], is confirmed. Our analysis shows that a high degree of market power normally produces the inverted‐U shape for unemployment. Moreover, we also illustrate that this inverted‐U shape can be reversed when the ability of trade unions to internalize the provision of social services is great enough at sector level.     

The evolving patterns of competition after deregulation: the relevance of institutional and operational factors as determinants of rivalry

In this research, we apply an ecological model of competition to analyze the effect of deregulation on within industry competitive patterns. Particularly, we identify organizational forms within the population according to two different perspectives: an operational one and an institutional one. We argue that deregulation influences the relative importance of each of these dimensions at determining the set of firms that can be considered direct competitors, and the intensity with which they compete. Our findings show that the use of these two perspectives is of utmost importance to understand the evolution of competition in contexts where deregulation takes place. As our arguments predict, we show that, during the regulated period, competition was based on institutional definitions of organizational forms. However, after deregulation, competition progressively focused on operational definitions of organizational form. Our findings confirm the relevance of deregulation at shaping competitive interdependences within an industry.     

HOUSEHOLDS’ BEHAVIOUR AND ENVIRONMENTAL EMISSIONS IN A REGIONAL ECONOMY

Households have significant demand-side potential to drive reductions in atmospheric emissions, including both direct and indirect emissions. Our analysis focuses on the behaviour of a regional economy (Aragon, Spain) and its impact on greenhouse gases (GHG) and sulphur dioxide (SO₂). Using a CGE model, we simulate scenarios and evaluate the environmental impact of adopting changes considered in the Aragonese Climate Change and Clean Energy Strategy. Specifically, we analyse the impact of electricity savings and the promotion of public transport (bus or train) versus private car use. The results indicate that 1 MWh of saving in electricity consumption by households could reduce emissions of GHG by 0.112 kt of equivalent CO₂ and 8.209 kg of SO₂ with a shift in demand preferences and 0.022 kt of equivalent CO₂ and 7.612 kg of SO₂ with an efficiency improvement. Moreover, household changes in demand preferences regarding private/public transport, also contribute to reduce emissions.     

ON THE IMPACT OF FUNDAMENTALS,LIQUIDITY, AND COORDINATION ON MARKET STABILITY*

We develop a coordination game to model interactions between fundamentals and liquidity during unstable periods in financial markets. We then propose a flexible econometric framework for estimation of the model and analysis of its quantitative implications. The specific empirical application is carry trades in the yen–dollar market, including the turmoil of 1998. We find a generally very deep market, with low information disparities among agents. We observe occasional episodes of market fragility or turmoil with up by the escalator, down by the elevator patterns in prices. The key role of strategic behavior in the econometric model is also confirmed.