The effects of globalization and technology on the elasticity of substitution

The elasticity of substitution between capital and labor (\(\sigma\)) is usually considered a “deep parameter”. This paper shows, in contrast, that \(\sigma\) is affected by both globalization and technology, and that different intensities in these drivers have different consequences for the OECD and the non-OECD economies. In the OECD, we find that the elasticity of substitution between capital and labor is below unity; that it increases along with the degree of globalization; but it decreases with the level of technology. Although results for the non-OECD area are more heterogeneous, we find that technology enhances the substitutability between capital and labor. We also find evidence of a non-significant impact of the capital-output ratio on the labor share irrespective of the degree of globalization (which would be consistent with an average aggregate Cobb–Douglas technology). Given the relevance of \(\sigma\) for economic growth and the functional distribution of income, the intertwined linkage among globalization, technology and the elasticity of substitution should be taken into account in any policy makers’ objective function.     

Revitalising local democracy: A social capital analysis in the context of a New Zealand local authority

Using an exploratory case study, we assess whether markets and strategic performance management systems (SPMS) enhanced social capital of a local authority in New Zealand and its capacity to foster democracy. We found that SPMS enhanced the interaction among managers and between managers and residents and provided residents with opportunities to participate in local authority decision-making. Market forms of management however, promoted individualism and the pursuit of narrow departmental goals. There was increased control by managers and greater reliance on experts which diminished local people's participation (and the role of councillors) in local affairs. The pairing of contradictory discourses based on efficiency, markets and participatory democracy promoted an overly rational form of democracy inimical to a deliberative democracy. The relations between staff were in a state of continuous tension. The paper contributes to an understanding on how the interaction between the state and local authorities affects local authority social capital and the potential effects on community social capital and local democracy. This paper demonstrates a need for greater attention to the contest between different discourses in the construction and sustenance of social capital and the pursuit of democracy.     

Are consumers more rational and informed purchasers during recession periods? The role of Private Labels and retailing strategies

This paper aims to investigate how economic crisis changes consumer behaviour and mass retailers’ strategies, the interrelationship of these changes, and how Private Labels (PLs) can influence and be used in this process. The authors analysed data collected from 535 consumers and carried out statistical processing (ANOVA, cluster, etc.) to detect changes in the selection of the retailer, potential variations in the selected brand for various categories of food and non-food products, changes in preparation activities and behaviours prior to and during the purchase (leaflets, internet, promotions, coupons, etc.). Results indicate that consumers have noticeably moved to discount and ELP-based retailers, to PL products, increased the use of Internet to prepare and make purchases and, furthermore, they feel good with the decisions they’ve taken even after the recession, and want to continue doing so. The rising sales of discounters and PLs confirm that economic crisis boosts changes both in consumer behaviour and the retailing sector. Findings highlight the importance of some retailers’ strategies to face adverse economic situations and how PLs can be used as game-breakers, as they are preferred by consumers in these situations.     

Building new plants or entering by acquisition? Firm heterogeneity and entry barriers in the U.S. cement industry

I estimate a model of entry for the cement industry that considers two options of expansion: building a plant or acquiring an incumbent. The model takes into account that there is a transfer of the buyer firm‐level characteristics to the acquired plants, which affects profits from the acquisition. Estimates show that a less‐permissive Reagan–Bush administration's merger policy would decrease the number of acquired plants by 71%, greenfield entry would increase by 9.2% and consumer surplus would decrease by 23.5%. Results suggest that regulators should be concerned about policies that negatively affect the efficient reallocation of assets between incumbents and entrants.     

A cross-cultural study of consumer complaining behavior: VCR owners in the U.S. and Puerto Rico

This study investigates differences in complaining behavior between American and Puerto Rican VCR owners. It is proposed that in Puerto Rico, both cultural values and institutional barriers tend to impose restrictions on complaining behavior that do not exist in the U.S. Hypotheses are developed concerning the impact of cultural differences on: (a) perceptual and attitudinal antecedents to complaining in Day's (1984) model of complaining behavior, (b) the propensity to complain, and (c) the use of public vs. private actions.Results of the data analysis indicate that Puerto Rican VCR owners are less likely to complain than American VCR owners. Also, among complainers, Puerto Ricans were found less likely to take public actions than Americans. Only weak support was obtained for the predicted differences on the antecedent variables to complaining. Implications for marketers and public policy makers are discussed.

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Ein interkultureller Vergleich des Beschwerdeverhaltens von Konsumenten: Besitzer von Videokassettenrecordern in den USA und in Puerto Rico

Zusammenfassung Die Studie geht davon aus, daß in Puerto Rico sowohl kulturelle Werthaltungen als auch insitutionelle Barrieren das Beschwerdeverhalten von Konsumenten stärker einschränken als in den USA. Diskutiert werden fünf hinderliche Wertorientierungen, nämlich Passivität, internale Attribution, Abhängigkeit, Vermeidung von Unsicherheit und Fatalismus. Mit institutionellen Barrieren werden Eigenschaften der Marketinginstitutionen gemeint, die direktes Beschwerdeverhalten abwehren. Offensichtlich sind Marketingabteilungen in Puerto Rico weniger empfänglich für kritische Meinungen von Konsumenten als vergleichbare Einrichtungen in den Vereinigten Staaten.Bei der Hypothesenbildung werden die Einflußfaktoren auf das Beschwerdeverhalten nach dem Modell von Day(1984) benutzt, die mit kulturellen Unterschieden variieren dürften. Diese Einflußfaktoren sind(a) die wahrgenommenen Kosten der Beschwerde, (b) die subjektiv empfundene Wahrscheinlichkeit, daß die Beschwerde Erfolg haben wird, und (c) die Einstellung gegenüber dem Beschweren als Verhaltensweise. Die empirischen Ergebnisse zeigen bei Puertoricanern tatsächlich eine geringere Tendenz zum Beschwerdeverhalten als bei Amerikanern, wenn auch im einzelnen nicht alle Hypothesen durch die Daten gestützt werden. Der Beitrag diskutiert Schlußfolgerungen sowohl für das Marketing wie auch für die Verbraucherpolitik. Die Anbieter sollten die Empfänglichkeit für Konsumentenbeschwerden in Puerto Rico erhöhen. Kommunikationspolitische Maßnahmen der Hersteller von Videokassettenrecordern sollten den Konsumenten in Puerto Rico deutlich machen, daß ihnen die Zufriedenheit der Kunden ein echtes Anliegen ist.Andererseits sollte die staatliche Einrichtung für Konsumentenangelegenheiten in Puerto Rico Erziehungsprogramme entwickeln mit dem Ziel, Konsumenten deutlich zu machen, daß Beschwerdeführung bei Produktmängeln ein angemessenes und wünschenswertes Verhalten ist. Ebenso sollte diese Einrichtung prüfen, ob neue gesetzgeberische Maßnahmen zum Verbraucherschutz notwendig sind.

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Sigfredo A. Hernandez and William Strahle are Assistant Professors of Marketing and Robert C. Sorensen is Professor of Marketing at Rider College, Lawrenceville Rd, Lawrenceville, NJ 08648, USA. Hector L. Garcia is Assistant Professor of Social Sciences at Universidad del Turabo, P.O. Box 3030, University Station, Gurabo, PR 00658, USA.     

Contextual issues of the convergence of International Financial Reporting Standards: The case of Germany

The objective of this paper, using Germany as a case study, is to show that accounting as the language of business is deeply embedded in a country's social, political and economic environment and that these contextual factors cannot be ignored in the process of convergence. Specifically, by invoking the accounting ecology framework and interviewing selected stakeholders, this study critically examines the unique features of accounting in Germany and raises issues related to the adoption of IFRS. The findings of this study provide evidence of the importance of considering the contextual influences in successful adoption of IFRS in a country.     

Another Look at the Radner-Stiglitz Nonconcavity in the Value of Information

This paper revisits the well-known result of R. Radner and J. Stiglitz (1984, in “Bayesian Models of Economic Theory,” Elsevier, Amsterdam) which shows that, under certain conditions, the value of information exhibits increasing marginal returns over some range. Their result assumes that both the number of states and the number of signal realizations are finite, assumptions which preclude most analyses of optimal information acquisition. We provide sufficient conditions that yield this nonconcavity in the value of information in a general framework; the role that these conditions play is clarified and illustrated with several examples. We also discuss the robustness of the nonconcavity result, and the difficulties involved in getting the value of information to be globally concave. Journal of Economic Literature Classification Number: D83.     

The fading 1990s in Japan: Driving forces behind the unemployment upsurge

This paper sheds new light on the causes of the unemployment upsurge in Japan during the “fading 1990s”, an unprecedented period of structural crisis. We estimate a labor market model and identify the main macroeconomic determinants of labor demand and labor supply decisions in the last decades. We then conduct dynamic simulations and assess the relative contribution of these determinants to the evolution of unemployment from 1990 to 2002. Beyond the leading role exerted by the decline in productivity growth, we find the active and expansionary measures undertaken by the government had an overall negative effect on the labor market.     

Risk aversion, moral hazard, and the principal's loss

Summary. In their seminal paper on the principal-agent model with moral hazard, Grossman and Hart (1983) show that if the agent's utility function is , then the loss to the principal from being unable to observe the agent's action is increasing in the agent's degree of absolute risk aversion. Their proof is restricted to the case where the number of observable outcomes is equal to two, and it uses an argument that is specific to that case. In this note, we provide an alternative proof that generalizes their result to any (finite) number of outcomes. Received: March 21, 2001; revised version: June 21, 2001