Late entry,market shares and competitive survival: The case of synthetic fibers

This paper examines product policy in relation to the experience curve and product life cycle concepts in the context of the experience of the thirteen major firms in the Western European synthetic fibers industry. It examines the hypothesis based on Boston Consulting Group and the Profit Impact of Market Share (PIMS) evidence that late entrants to a market will be at a competitive disadvantage because they lack the accumulated experience of the pioneering firms. For each of the three main synthetic fibres, acrylic, nylon and polyester, it was found that the early entrants who established major market shares early in the growth phase of the product life cycle were able to maintain that leadership nearly twenty years later. In contrast not only did almost all the late entrants fail to achieve significant market shares but in the difficult market conditions between 1974 and 1981 they provided seven out of nine market withdrawals.     

A note on the extension of tables for the Friedman statistic

Abstract  The tables for the Friedman rank-test arc extended using a sampling method. A table is given for the traditional significance levels .01, .025, .05 and .10 for number of blocks equal to 7 and 8 and for treatments of size 6 and 7. A brief discussion of available tables is also included along with an example of an application.     

The First U.S. Food Stamp Program: An Example of Rent Seeking and Avoiding

Abstract . Rent seeking involves the wasteful expenses incurred to secure, acquire, or maintain a monopoly position. Rent avoiding involves the expenditures undertaken to avoid the imposition of rent-seeking costs. Each represents a social cost of Tullock rectangle loss in addition to the dead-weight or Harberger triangle loss that combined to form the Harberger-Tullock trapezoid social cost. The first Food Stamp Program in the United States came about through the rent-seeking and/or rent-avoiding efforts of farmers, grocers, bankers, and other economic agents and did not lead to the promotion of social welfare. The evidence of these self-interested efforts was gleaned from articles in the New York Times and government documents. The first Food Stamp Program also fits the economic theory of regulation developed by Stigler, Jordan, Peltzman and others, and it involved imposed costs on economic agents as the program evolved.     

Bank lending rules for managing sovereign risk

A simple domestic lending rule is one that ensures that the loan rate exceeds the bank's cost of capital and the borrower's expected cashflows exceed the terminal value of the loan. Because a sovereign loan is not collateralized and lacks recourse, the domestic lending rule is not adequate for making sovereign lending decisions. Three modifications are suggested. First, the sovereign borrower's time preference for consumption needs to be considered. Second, the domestic borrower's decision to default voluntarily is made after observing the value of the collateral whereas the sovereign borrower's decision is made after observing earnings. In this paper, the sovereign borrower upgrades expectations in a Bayesian manner. Although no lending rule will completely prevent a default, the probability of default can be managed leading to a third modification.     

Strengthening executive decision making

Although decisions determine corporate fates, executives don't always know how to make the best choices. The author examines today's dissatisfaction with corporate decision making, reviews how it can deteriorate as the pace of change increases, and offers five comprehensive strategies for improving the decision making process. © 1995 by John Wiley & Sons, Inc.     

Economies of scale in steam-electric power generation in East-North-Central U.S.

In this study the author investigates firm-level cross-sectional unit cost advantages for electricity generation for 31 regulated private steam-electric utilities in East-North-Central U.S. region during 1987. The production technology is modeled using the implied dual minimum total variable cost translog methodology. Estimates of Zellner’s Seemingly Unrelated Regressions indicate a smooth non-homothetic technology, a typical regional firm-level scale economies of about 0.263, and an implied mean cost-output elasticity of about 0.737. Significant scale economies exist for several of the smaller utilities. The findings support policies which steer energy-intensive industrial location decisions in a direction which captures unutilized unit cost economies in electricity generation.     

A non-co-operative bargaining model of membership expansion in a producer co-operative

This paper presents a non-co-operative bargaining model of membership expansion in a producer co-operative. The emphasis is on examining the distribution of the resulting surplus between the existing partners and the new member. In the presence of a number of alternative candidates, the existing partners can use the threat of switching negotiating partners to extract additional surplus from the negotiations. The degree of symmetry between the competing candidates necessary for these threats to be credible is specified, as is the nature of the dependence of the parties' payoffs on the various parameters of the model. Potential sources of misallocation within the model are identified.     

A different perspective on operating leverage: Comments

A recent article in this journal by Dran (1991) suggests that the usual treatment of degree of operating leverage (DOL) is misleading because it improperly attributes the DOL to the ratio of fixed to total costs rather than the closeness of the firm’s output to breakeven. Managerial economics texts are clear in identification of DOL as an elasticity concept which varies with the nearness to break-even. Examples associating DOL with the relative level of fixed cost arise from association of higher fixed costs with higher breakeven points, and this appears to be the normal economic relationship.