Uncovering the hidden transaction costs of market power: A property rights approach to strategic positioning

A central construct in competitive strategy research is market power, the ability to raise price above marginal cost. Positioning research focuses on attempts to build, protect, and exercise market power. However, this approach contains hidden assumptions about transaction costs. Parties made worse off by the exercise of market power can negotiate, bargain, form coalitions, and otherwise contract around the focal firm's attempts to appropriate monopoly profits—depending on transaction costs. We build on property rights economics to explain how transaction costs affect positioning and offer propositions about successful positioning in an environment with transaction costs.     

Carbon information on vegetables: How does it affect the buying process?

Information on the climate impact of a food product has practically not been communicated in Germany, even though it could provide important acknowledgement of producers’ actions in low‐carbon production. So far, carbon labelling has predominantly been discussed without taking into account German consumers’ opinions (proven by empirical data) on this issue, even though involving the consumer in the considerations of a Carbon Label is essential for its success. Especially the question, if information on the product carbon footprint is a considerable factor within the search process of a purchase decision, was of special interest in this work. To answer these questions, we analysed consumers’ information‐seeking behaviour using an information display matrix (IDM) experiment with 232 participants. The IDM is a process tracing technique which allows to track the information search in a buying process. Our results show that basically the place of origin is the most important criterion for the purchase decision, followed by price and production method (conventional/organic). In contrast, the sustainability information (i.e., carbon footprint and water consumption) are at a low level of importance. Comparing two locally produced products with the help of a multinominal logistic regression‐model, it seems that the group of consumers preferring organic products is influenced in the purchase decision by the carbon footprint information. In summary it can be stated that although some people may be basically interested in carbon labelling of fresh food, the purchase decision would probably be hardly influenced by a carbon label on vegetables at present. The majority of people are more concerned about factors like origin and price so that Carbon Labelling would only be a viable option for a small group of consumers.     

Drucker as Business Moralist

In his 1981 article "What is 'business ethics'"? Peter Drucker maintains that the then current business ethics literature is a form of casuistry, and it provides an illegitimate argument for business apologists, while it also unjustly bashes business. I agree with W. Michael Hoffman's and Jennifer Mills Moore's criticisms of Drucker's article. However, by limiting themselves to this article, rather than considering Drucker's management works, they have missed an opportunity to benefit from his acknowledged practical wisdom. In this paper, I seize the opportunity to show that Drucker takes business ethics seriously, and I develop his position on business morality. His view of business management responsibility and the related notion of a just organization is seen to be essentially Platonic.     

The systematic risk of corporate bonds: default risk,term risk,and index choice

In this paper, we empirically examine the systematic risk of corporate bonds in the Euro area. Based on a unique sample of 784 bonds from 1999 to 2010, we show that the systematic risk of constructed bond portfolios and individual bonds—measured against three different market indices—depends on credit quality, term risk, and index choice. A significant increase in systematic risk for lower-rated bonds is observed following the start of the financial crisis. In multi-factor models, bond portfolios load significantly on default and term risk, which are included as additional factors. Conducting Fama and MacBeth cross-sectional tests, we find that default and term risk are priced with economically relevant premiums that range from 0.35 to 0.62 % per month. Our results are robust to the inclusion of characteristics such as rating and time to maturity.     

Bond offerings in China

This study appraises the value created by a bond offering in China, where high levels of state ownership and insider ownership raise concerns about the use of the proceeds. To estimate the impact of a bond issue on the firm's value, we apply an event‐study methodology on a sample of 481 issues of 347 Chinese companies over the period 2009–2013. It turns out that state ownership has a positive impact on the value of a bond offering for shareholders, which is consistent with an implicit guarantee of the issue by the state. For privately owned companies, insider ownership exerts a nonlinear impact on the firm's value, supporting an aligning effect in the use of the proceeds. Overall, the study confirms the key role of ownership structure in Chinese firms.     

Some Potential Linkages for Input-Output Analysis with Flow-of-Funds

Three major, interrelated accounting statements, at the frontiers of quantitative economic analysis, are three interrelated systems, namely: (1) National income and product accounts (NIPA), (2) The input-output tableaux, (IO), and (3) flow-of- funds accounts (FF). The third-mentioned system is somewhat less available and used in only limited areas of macroeconomic analysis. This paper is mainly concerned with use of FF accounting systems. This system shows where financial resources originate, and where they go in support of real capital formation. In this respect, interest rates and other market-based financial rates are of key importance. While much macroeconomic analysis is based on the rates that fit the yield curve, showing the interest rate structure over various maturities of debt associated with a given degree of risk. In contrast, the FF accounts throw light on the whole spectrum of interest rates, across maturities and debt qualities. For example, in analysis of the real estate market and funding of capital formation there, it is important to have a full understanding of the course of mortgage rates of different maturities and qualities. In short, it is necessary to develop a full appreciation of supply and demand forces in the mortgage market, which often is not obviously related to movements of the operative rate for monetary policy, such as very short-term inter bank rates or call money rates. This paper attempts to provide material from the flow-of-funds accounts that would make it possible to analyze the movement of relevant mortgage rates or whatever other rates are needed to understand the financing of capital formation in real estate.     

Occupational structure in the Czech lands under the second serfdom

This article presents an analysis of occupational structure, a key component of the ‘Little Divergence’, in an eastern‐central European economy under the second serfdom, using data on 6,983 Bohemian villages in 1654. Non‐agricultural activity was lower than in western Europe, but varied positively with village size, pastoral agriculture, sub‐peasant strata, Jews, freemen, female headship, and mills, and negatively with arable agriculture and towns. It showed a curvilinear relationship with the ‘second serfdom’, as proxied by landlord presence on village holdings. Landlord presence in serf villages also reversed the positive effects of female headship and mills on non‐agricultural activities. Under the second serfdom, landlords encouraged serf activities from which they could extract rents, while stifling others which threatened manorial interests.