Valuation of a Repriceable Executive Stock Option

We introduce a path-dependent executive stock option. The exercise price might be reduced when both the firm’s stock price and a stock market index fall greatly. The repriceable executive stock option has a simple payoff that may be used for realistic executive rewards. We show the valuation formula, and compute the probability of the repriceable executive stock option expiring in-the-money. Both price and probability are important pieces of quantitative information when choosing an executive compensation package.     

Small and medium-sized transnational corporations: Salient features

This second half of a series on small and medium-sized transnational corporations (TNCs) describes their main features in terms of such variables as the markets and industries in which they operate, ownership, forms of investment, performance and competitive advantages. It also deals with strategies that small and medium-sized enterprises (SMEs) tend to take in their foreign operations.An appreciable share of small and medium-sized TNCs produces highly-specialized or niche products that give them relatively high market power in those market segments. Their principle source of advantages emanate from proprietary technology, flexible management, organization and market ability, reputation and supplier/customer relations. Small and medium-sized TNCs, unlike their larger counterparts, are more likely to enter developing countries through joint ventures and other collaborative arrangements with local firms. SMEs from some developed countries, mainly Europe, are particularly willing to enter joint ventures.Transnational Corporations Affairs Officer United Nations Conference on Trade and DevelopmentThe aurthor is grateful for advice and comments by Hafiz Mirza. This paper is based on the chapter IV of the UNCTAD Programme on Transnational Corporations,Small and Medium-sized Transnational Corporations: Role, Impact and Policy Implications, New York: United Nations publication, Sales no. E.93.II.A.15, 1993.     

Spatial patterns of residential development

A simple dynamic model of residential development with durable housing, where all households are identical and all developers have perfect foresight, is studied. It is shown that, unlike the case of static models, it is quite possible that house size decreases, and thus population density increases, with distance from the city center and that the house rent curve has positive gradient in certain area.     

Economics of Agglomeration

We address the fundamental question arising in geographical economics: why do economic activities agglomerate in a small number of places? The main reasons for the formation of economic clusters involving firms and/or households are analyzed: (i) externalities under perfect competition; (ii) increasing returns under monopolistic competition; and (iii) spatial competition under strategic interaction. We review what has been accomplished in these three domains and identify a few general principles governing the organization of economic space. A few alternative, new approaches are also proposed.J. Japan. Int. Econ.,December 1996,10(4), pp. 339–378. Kyoto University and University of Pennsylvania; and CORE, Université Catholique de Louvain and CERAS–ENPC (URA 2036, CNRS).     

Local Agglomeration and Global Networks Of the Semiconductor Industry: a Comparative Study of U.S. and Japanese Firms

The objective of this study is to examine the spatial organization of the U.S. and Japanese firms in the semiconductor industry. Our analyses give special consideration to the nature of the activities undertaken in the semiconductor production processes, the nature of the firm organization, the nature of the firm ownership, and the geographical area of analysis. Our approach is essentially diagrammatic in order to incorporate all the above factors. Therefore, unlike past studies, our study places special emphasis on tracing the connections between the whole spatial chain of production activities. The result is that different stages within the semiconductor production process have different geographical features, and that even the same vertically integrated sectors in the semi-conductor industry that differ by Japanese or U.S. ownership have quite different geo-graphical organizations.     

Dynamics of knowledge creation and transfer: The two person case

This paper presents a micro-model of knowledge creation and transfer for a couple. Heterogeneity of people in their state of knowledge is essential for successful cooperation in the joint creation of new ideas. However, the very process of cooperative knowledge creation affects the heterogeneity of people through the accumulation of knowledge in common. The model features myopic agents in a pure externality model of interaction. The equilibrium process tends to result in the accumulation of too much knowledge in common compared to the most productive state. Equilibrium paths are found analytically, and they are a discontinuous function of initial heterogeneity.     

Edokko Options: A New Framework of Barrier Options

In this paper, we will give a new framework of barrier options to generalize`Parisian Option' and `Delayed Barrier Option'. Take a stopping time asthe caution time. When occurs, derivatives are given `Caution'. After, if K.O. time =() occurs, derivative contractsvanish. We simply say that first `Caution' second `K.O.'. Using thisframework, designs of barrier options become more flexible than before and newrisk management will be possible. New barrier options in this category arecalled Edokko Options or Tokyo Options.