A monetary economy with counterfeiting

We apply a search-theoretic model of fiat money to study the equilibria in which counterfeit money is accepted. Circulation of counterfeit money presupposes that the agents are impatient and that the punishment for holding it is not too severe. When the stock of genuine money is small counterfeit money may improve the efficiency of the economy. We establish that a monetary economy can be created with private provision of (counterfeit) money as long as the ruler has control over punishments. Totally noncooperative provision will fail as the economy will become flooded with money.     

Voluntary Environmental Agreements vs. Emission Taxes in Strategic Trade Models

The purpose of the paper is to narrow the gap between the widespread use of voluntary agreements and research on the rationale of such approaches. A topical example are voluntary agreements of many industries to reduce carbon dioxide emissions because of global warming. If the industry anticipates that taxes and fees will be introduced in the coming years, it seems rational to act in advance in order to mitigate the tax levels.The conventional approach in strategic trade and tax models was to look at a two-stage game where governments set taxes first and then firms react. In such a policy regime the government is concerned about the international competitiveness of its firms and sets taxes below marginal damages. In this paper, we consider a policy regime with a reversed timing. Firms commit themselves in the face of emission taxes to abatement efforts and to lower levels of the environmentally intensive output. Then the government introduces the tax. Under this timing of strategies the tax is equal to marginal damage. Firms waive profit and reduce output in order to use less of the polluting input. The reward for this behavior will be a less strict use of policy instruments and hence lower abatement costs in the near future.     

Governance, organizational capabilities, and restructuring in transition economies

This paper focuses on the links between governance, firm capabilities and restructuring following the large-scale privatization process in Central and Eastern European transition economies using an integrative approach. Restructuring in these countries has been motivated by political and institutional changes and less so by market forces. Accordingly, political processes have produced political solutions such as “give-away” privatizations to insiders. These privatizations, in contrast to divestitures to outside owners, have realized less substantive restructuring because non-market incentives, such as too much managerial equity ownership, have created managerial entrenchment. In addition, we propose a connection between governance and organizational learning suggesting that learning is inhibited by excessive managerial ownership and lack of board knowledge regarding its oversight function. Furthermore, this entrenchment and poor board functioning may be perpetuated in financial-industrial groups, which have emerged as substitutes for market intermediaries in emerging economies. Thus, we propose that outside ownership involvement and the development of organizational capabilities may facilitate restructuring in the Central and Eastern European context. Our theoretical arguments are supported by case study evidence from transition economies.     

Revised HWWA commodity price index

The pattern of international trade is changing constantly. The HWWA Index of World Market Prices of Commodities, which is weighted by imports, therefore needs to be adapted from time to time in order to preserve its relevance as an indicator of price trends in international commodity markets. It is now (as of September 2003) published with updated weights based on 1999–2001 import values and with a new price basis (2000=100).     

Oil prices decline as concerns about supplies lessen

Expectations of shorter oil supplies in the case of a war in the Middle East pushed crude oil prices upwards for many months, but in March prices started to fall significantly even before the war against Iraq had started. Does the price peak lie behind us, and can oil consumers even hope — after the war — for a prolonged period of low oil prices?     

HWWA raw materials price index on a new basis

The division of labour in the world economy is subject to a process of constant change which also affects the meaningfulness of raw materials price indices. Such indices require periodic revision in order to maintain their significance as current indicators of commodity market price developments. This is particularly true of an index with a constant price and weighting basis such as the HWWA raw materials price index.     

The high cost of accurate knowledge

Many business thinkers believe it's the role of senior managers to scan the external environment to monitor contingencies and constraints, and to use that precise knowledge to modify the company's strategy and design. As these thinkers see it, managers need accurate and abundant information to carry out that role. According to that logic, it makes sense to invest heavily in systems for collecting and organizing competitive information. Another school of pundits contends that, since today's complex information often isn't precise anyway, it's not worth going overboard with such investments. In other words, it's not the accuracy and abundance of information that should matter most to top executives--rather, it's how that information is interpreted. After all, the role of senior managers isn't just to make decisions; it's to set direction and motivate others in the face of ambiguities and conflicting demands. Top executives must interpret information and communicate those interpretations--they must manage meaning more than they must manage information. So which of these competing views is the right one? Research conducted by academics Sutcliffe and Weber found that how accurate senior executives are about their competitive environments is indeed less important for strategy and corresponding organizational changes than the way in which they interpret information about their environments. Investments in shaping those interpretations, therefore, may create a more durable competitive advantage than investments in obtaining and organizing more information. And what kinds of interpretations are most closely linked with high performance? Their research suggests that high performers respond positively to opportunities, yet they aren't overconfident in their abilities to take advantage of those opportunities.     

Government influence on energy prices

There is now widespread agreement that, in the interest of energy conservation and substitution of oil, consumer prices for energy should reflect world market prices while taking account of longer-term trends. Are the energy policies of the major industrialised countries in conformity with this demand?