Environmental Performance and the Market for Corporate Assets

Research summary : Scholars and policy‐makers have tended to assume that asset sales have a negative effect on stakeholders, but quantitative evidence to inform the debate has been scarce. In our research, we explored one way such sales could be beneficial: by facilitating the transfer of specialized capabilities used for environmental improvement. Employing quantitative data from a longitudinal sample of U.S. manufacturers, we find evidence consistent with the transfer of capabilities to or from acquired assets. Our results inform theories of ownership change and the conditional flow of capabilities among operations. They provide evidence as well of the existence of environmental capabilities. For policy‐makers they provide needed evidence and insight on the merits of regulations designed to limit asset sales. Managerial summary : It is often assumed that acquisitions harm environmental performance‐‐acquisition leads to greater emphasis on efficiency, while focusing on environmental performance is driven by managerial discretion. We propose instead that acquisitions might lead to improvement in environmental outcomes; the key is in knowing where to look for improvement. We studied thousands of facility‐level acquisitions and find that when a clean firm buys a facility from a dirtier firm, that facility's environmental performance improved. When a dirtier firm buys from a cleaner one, however, it is the dirtier firm's other facilities in the same industry of the target that improved. These results, along with extensions we undertook, suggest that managers and policy‐makers should view acquisitions as conduits rather than impediments in transferring environmental capabilities. Copyright © 2017 John Wiley & Sons, Ltd.     

Concern for Fairness and Incentives in Water Negotiations

This paper focuses on transboundary water resources and investigates the presence of incentives to cooperate in investment projects for improving water availability. Investments over transboundary water cannot be always protected by suitable contractual arrangements because countries’ actions cannot be monitored and enforced by a third party. In such a case, the traditional literature predicts that cooperation rarely emerges due to the risk of ex-post opportunistic behaviours by the parties. This prediction does not provide a satisfactory representation of many real-world situations in which riparian countries have demonstrated a remarkable ability to cooperate over their shared water resources. This paper shows that it is possible to reconcile the empirical evidence with the theoretical approach if one assumes that countries display some concern for ‘fairness’ when negotiating, which depends on their initial level of investment. Within the proposed framework, the incentives to cooperate turn out to be higher than traditional literature predicts because, by engaging in the investment project, countries do not only increase the amount of water effectively available, but also—through their concern for fairness—the share of water obtainable at the bargaining table.     

Environmental Economics and Modeling Marketable Permits

This paper reviews fundamental concepts in environmental economics and explores theoretical results regarding the choice of the key policy instruments for the control of externalities: taxes, subsidies and marketable permits. The paper explains why today market mechanisms are increasingly being used as a tool for allocating unpriced rights and scarce resources. We survey how significant market imperfections, a pre-existing regulatory environment and concentration in both permit and output markets can impede the proper functioning of a permit system. The main factors that affect the effectiveness of marketable permits are then discussed. Given the importance of understanding the emission permit price formation, we overview recent attempts at developing valid price models for emission permits, taking into account banking and borrowing opportunities, pollution abatement measures, strategic trading interactions and the presence of asymmetric information in the permit market.     

Building Trust? Conditional Cash Transfer Programmes and Social Capital*

In this paper, we propose a measure of social capital based on behaviour in a public goods game. We conducted a public goods game within 28 groups in two similar neighbourhoods in Cartagena, Colombia, one of which had been targeted for over two years by a conditional cash transfer programme that has an important social component. The level of cooperation we observe in the ‘treatment’ community is considerably higher than that in the ‘control’ community. The two neighbourhoods, however, although similar in many dimensions, turn out to be significantly different in other observable variables. The result we obtain in terms of cooperation, however, is robust to controls for these observable differences. We also compare our measure of social capital with other more traditional measures that have been used in the literature.     

Addiction,social interactions and gender differences in cigarette consumption

This paper addresses the impact of addiction and social interactions on cigarette demand, controlling for demographic and socioeconomic factors. A Box–Cox double-hurdle model for the simultaneous decisions of how much to smoke and whether to quit smoking is estimated on individual data from the 2000 Italian “Health Status and Use of Health Services” survey. The model incorporates the fixed costs of quitting and allows for the analysis of the effects of addiction and social interactions on smoking participation and cigarette consumption. Estimation results show that the duration of the smoking habit, used as measure of addiction, significantly increases the level of cigarette consumption and lowers the probability of quitting. Social interactions significantly affect individual’s attitude toward smoking. Finally, gender differences are formally tested to verify whether male and female sub-samples can be pooled or should be separately analyzed. The hypothesis of equal consumption parameters is clearly rejected, suggesting the opportunity of distinguishing the consumption patterns of men and women.

Complexity,anachronism and time-parochialism: historicising strategy while strategising history

The focus of the article is the relationship between history and strategy. Although little interest can be found in mainstream management journals, the hidden relationship between history and strategy is looked for here in a double sense. On the one hand, the article will try to historicise strategy, questioning the alleged discontinuity that is normally used to explain the emergence of the notion itself. More than changes at the ontological level, it is changes at the perspectival level that explain the establishment of the new area of research. The article also discusses possible implications for broader historical research when taking into account some of the hidden distinguishing features of strategy studies and strategising history.     

Effects of background music endings on consumer memory in advertising

Background music is widely used in advertising to attract audiences' attention. However, no research to date has considered the effect of background music endings on consumer memory for advertised products and messages. Across two experiments, the present research shows that background music that ends abruptly (i.e., truncated ending) distracts consumers' attention, reducing memory for both products and messages, compared to background music that ends with a note in the chord of the dominant tonality (i.e., regular ending) or that concludes with a fading-out ending.     

Effects of fixed and continuously distributed delays in a monopoly model with constant price elasticity

In this paper, we analyze the dynamics of a monopoly model with constant elasticity in which the monopolist faces a form of bounded rationality due to limited accessibility to information. We assume the firm adopts a gradient mechanism to adjust the output level, and we investigate how the introduction of fixed and continuously distributed delays within the resulting continuous-time system may affect the long-run dynamics. We find that the stability of the equilibrium depends on the weighting function adopted to model continuously distributed delays, and the convergence of the realized output toward the steady state is crucially affected by the choice of the delay type which, in turn, reflects the availability and the weight assigned to information. Indeed, depending on the assumptions on modeling delays, the equilibrium point may undergo a Hopf bifurcation after which a limit cycle arises.     

A heterogeneous agent model of asset price dynamics with two time delays

This study constructs a heterogeneous agents model of a financial market in a continuous-time framework. There are two types of agents, fundamentalists and chartists. The former follows the traditional efficiency market theory and has a linear demand function, whereas the latter experiences delays in the formation of price trends and possesses a S-shaped demand function. The main feature of this study is a theoretical investigation on the effects caused by two time delays in a price adjustment process. In particular, two main results are demonstrated: One is that the stability switching curves are analytically derived, and the other is that the stability losses and gains can repeatedly occur when the shape of the curves are meandering. Although it is well known that a time delay has a destabilizing effect, these results imply that multiple delays can stabilize and destabilize a market price generating persistent deviations from the stationary price.     

A continuous-time heterogeneous duopoly model with delays

In this paper, the continuous-time version with delays of the model of Tramontana (Econ Model 27(1):350–357, 2010) is presented. The stability of the equilibrium point is discussed by analyzing the distribution of roots of associated characteristic equation. It is found that combining marginal costs with time delays gives rise to different economic scenarios, where stability switches may appear and Hopf bifurcations occur within certain range of parameters.