Revenues in discrete multi-unit, common value auctions: a study of three sealed-bid mechanisms

This paper proposes a discrete bidding model for both quantities and pricing. It has a two-unit demand environment where subjects bid for contracts with an unknown redemption value, common to all bidders. Prior to bidding, the bidders receive private signals of information on the (common) value. The relevant task is to compare the equilibrium strategies and the seller’s revenue of the three most common auction formats with two players. The result is that the Vickrey auction always gives the most revenue to the seller, the discriminatory auction follows closely and the uniform auction clearly is the worst due to demand reduction.

Cross-border acquisitions and taxes: efficiency and tax revenues

Abstract .  We develop a theoretical oligopoly model to study how international differences in profit and capital gains taxes affect foreign acquisitions. Reductions in foreign profit taxes tend to trigger inefficient foreign acquisitions, while reductions in foreign capital gains taxes may trigger efficient foreign acquisitions. Foreign acquisitions can increase domestic tax revenues even when profit taxes are evaded. The reason is that bidding competition between foreign firms ensures that all benefits from the acquisition, including tax advantages, are captured by a domestic seller paying capital gains taxes. Tax code issues, such as the treatment of goodwill, are shown to affect the pattern of foreign acquisitions.     

Surviving globalisation

This paper investigates the effects of international trade on firms' strategies for industry exit, either via closedown, switching industry or being acquired. We use a rich dataset of Swedish firms that extends over two decades to track firm choices between alternative strategies. We find that higher levels of international competition increase the probability of exit by merger and closedown. If trade is more intra-industry in character, the effect of import penetration on the probability of exit is less. The probability of exit by switching industry is higher in revealed comparative disadvantage industries. Finally, we find that the geographical source of international competition is important, the effects of trade on exit being strongest when trading partners are other OECD countries.     

Fixed effects demeaning in the presence of interactive effects in treatment effects regressions and elsewhere

The present paper shows that cross-section demeaning with respect to time fixed effects is more useful than commonly appreciated, in that it enables consistent and asymptotically normal estimation of interactive effects models with heterogeneous slope coefficients when the number of time periods, T, is small and only the number of cross-sectional units, N, is large. This is important when using OLS but also when using more sophisticated estimators of interactive effects models whose validity does not require demeaning, a point that to the best of our knowledge has not been made before in the literature. As an illustration, we consider the problem of estimating the average treatment effect in the presence of unobserved time-varying heterogeneity. Gobillon and Magnac (2016) recently considered this problem. They employed a principal components-based approach designed to deal with general unobserved heterogeneity, which does not require fixed effects demeaning. The approach does, however, require that T is large, which is typically not the case in practice, and the results reported here confirm that the performance can be extremely poor in small-T samples. The exception is when the approach is applied to data that have been demeaned with respect to fixed effects.     

Who leaves after entering the primary sector? Evidence from Swedish micro-level data

Using 14 waves of panel data, this paper investigates why employeesentering the primary sector exit subsequently. Transition probabilitiesare explained by a rich set of individual, regional and sectoralcharacteristics and a discrete-time competing risks model withunrestricted base-line hazards is used to distinguish betweenexits into a job in other sectors and other exits. The resultsconfirm Jovanovic's suggestion of ‘survival of the fittestmatches’ as workers and firms learn more about the qualityof the match between them. It is found that agricultural education,higher income and sector wage differences are the main determinantsof the hazard of moving to another sector, whereas marriageand higher education lower the hazard of leaving for non-employment.     

The distribution of abilities and the progressive income tax

This paper develops a model of endogenous labor supply, where agents are uncertain about their future wages. Assuming risk aversion, some redistributive taxation is thus warranted. It is shown that, for a particular parameterization of the tax system, an optimally progressive income tax exists. Comparative ststics analysis demonstrates how this tax system is effected by changes in the wage distribution. The paper ends with a discussion of whether an optimally progressive income tax can be politically sustained. It is shown that generally this is not the case in a political system with majority voting.     

Network capability,innovativeness, and performance: a multidimensional extension for entrepreneurship

Abstract

Small- and start-up firms in the high-tech industry usually engage in networking to overcome resource, knowledge, and competence constraints in creative, innovation-based competition. Quite often, however, network relationships fail due to lack of network capability (NC), defined as the ability to manage and gain benefits from external relationships. In the present study, we propose and examine an updated five-dimension NC construct and test its effect on innovativeness and performance. Two independent high-tech samples of small firms and start-ups support measurement properties of the proposed NC construct and suggest that the often-overlooked dimension in NC research of network relationship building is important to include in a complete NC construct. Doing so can help explain organizational innovativeness and effects on the customer, sales, and innovation performance more effectively. As a result, we find support for the proposed NC scale and the importance of network capabilities for small companies and start-ups to remain competitive.     

Euphemisms and hypocrisy in corporate philanthropy

Over the past two decades, a growing number of large multinational corporations have come to view philanthropy as an important part of their business operations. This has stimulated research on the many different strategies that are pursued by these corporations in their attempts to become more philanthropic while remaining economically responsible. In this situation, some researchers have argued, corporations run the risk of being caught out as hypocrites. Through an analysis of the corporate social responsibility reports of the biggest multinational corporations, this article shows how the risk of hypocrisy is managed communicatively through the use of euphemisms. The article argues that the use of euphemisms makes it possible to communicate both economically and philanthropically without manifest contradictions. Euphemisms, however, are also risky in their own right.