Divisionalization and Delegation in Oligopoly

We consider a model where oligopolistic firms create independent divisions or franchises, which subsequently delegate output decisions to managers. We show that the number of firms required to make divisionalization privately profitable is greater in our model than in previous pure divisionalization models. However, in contrast with pure delegation models, we show that the subgame perfect Nash equilibrium approaches perfect competition as divisionalization costs tends to zero, even with a small fixed number of firms.     

Ultimatum Bargaining Behavior in Israel, Japan, Slovenia, and the United States: A Social Utility Analysis

We explain the main features of the results of the four-country ultimatum bargaining experiments of Roth et al. (1991), Amer. Econom. Rev.81, 1068–1095) by a social utility model. The specification of social utility of a player has two parts: a linear combination of the monetary payoffs of the proposer and the responder and payoff uncertainty. We find that, on average, responders have negative regard for proposers' earnings in all countries. Proposers have negative regard for responders' monetary earnings in countries where responders have high negative regard for proposers' earnings (USA and Slovenia). In countries where responders have low negative regard for proposers' earnings (Israel and Japan), proposers are expected payoff maximizers. Journal of Economic Literature Classification Numbers: A13, C19, C44, C72, C92, D63, D64.     

Making urban road pricing acceptable and effective: searching for quality and equity in urban mobility

Urban Road Pricing has been proposed many times as a powerful instrument to fight congestion in urban traffic, but has systematically faced a hostile political envirionment, due to lack of confidence on its promised (traffic) results and fear of its political consequences. Lack of action in this front is contributing to stable or even growing congestion problems in most large cities.This paper tries to address the problem with a fresh look at the objectives of road pricing and at the reasons for that political hostility. For managing and developing the urban mobility system, efficiency and equity are normally taken as the basic economic objectives. Sustainability objectives may be integrated in the efficiency objective if we are able to represent adequately the costs of the resources consumed in the process. Political hostility is normally based on having to pay for what was freely available, and on the risk of exclusion for those with little revenue available for the extra cost of driving into the city.Pursuit of efficency leads to suggestion of marginal social cost pricing but this is hard to explain to the public and application of this principle is fraught with pitfalls since some components of that cost get smaller as traffic grows (noise related costs for example). Pricing is still a good option but the objective has to be something easier to understand and to serve as a target for mobility managers. That “new” objective is quality of the mobility system, with a meaning similar to that of “level of service” in traffic engineering, and prices should be managed to across space, time and transport modes in such a way that provision of service is made with good quality in all components.Pursuit of equity leads to some form of rationing, which has often been associated with high transaction costs and abuse by the administrators. But the use of electronic road pricing should allow easy ways to address the rationing process without such high costs. The basic proposition is that all local taxpayers receive as a direct restitution of their tax contribution a certain amount of “mobility rights”, which can be used both for private car driving in the tolled areas and for riding public transport.These principles are easily applicable with a variety of technical solutions for road pricing, from the simplest cordon pricing to the more sophisticated “pay-as-you-go” schemes. The paper addresses this question of implementation and argues for increasingly sophisticated schemes, as people get accustomed to the principles and finer targeting of demand segments may be needed.     

Do going concern opinions provide incremental information to predict corporate defaults?

Review of Accounting Studies - Investors, regulators, and academics question the usefulness of going concern opinions (GCOs). We assess whether GCOs provide incremental information, relative to...     

Exchange Rates,Employment and Labour Market Rigidity

In this paper, we study the effect of labour market rigidity on the impact of exchange rate shocks on employment. We use a panel dataset comprising 22 manufacturing sectors across 23 OECD countries. In our econometric model, the impact of exchange rate fluctuations on sectoral employment is mediated by the degree of openness and by a measure of labour market rigidity: the OECD's employment protection legislation (EPL) index. Our results suggest that greater labour market rigidity reduces the impact of exchange rate shocks on employment. This effect is statistically significant for low‐technology sectors.     

EU‐China Collaboration in the Reform of the International Monetary System: Much Ado About Nothing?

The global financial crisis has shown that the current international monetary system (IMS) suffers from an inherent flaw: it depends on US current account deficits for the provision of global liquidity. Under this arrangement, peripheral countries have to accept periodically the debasement of the US dollar. Thus, there are some mutual incentives for the EU and China to reform the current IMS through cooperation. Both are in favour of stable exchange rates, and both are keen to constrain US macroeconomic profligacy. There have been some efforts towards these objectives in the past, especially during the French presidency of the G20 in 2011. However, there has been no significant progress. On the European side, there is not a united and independent Europe which could act as the primary agent of reform. On the Chinese side, Beijing does not see Europe as a reliable partner because the latter is deemed to have a major vested interest in the current regime. As a result, the French government failed to focus the world's attention on the reform of the IMS during G20 Cannes Summit, and the Chinese government has chosen a more unilateral way to internationalise its own currency.     

Regional output growth and the impact of macroeconomic shocks in Mexico

This paper presents an empirical analysis of the relationship between national and regional output growth in Mexico, and the impact of domestic and international shocks on national, regional and state output movements. Our results suggest that there are similarities, but also significant differences, in real output dynamics across the regions and states of Mexico and that it would be wrong to regard the Mexican economy as a homogeneous entity. The results show that real output growth in Mexico and the United States are linked, but there is no common output trend for the two countries. At the regional level, it appears that North and Central Mexico share similar features, but the path of output growth is more distinctive in South Mexico. Overall, our results suggest that assessments of macroeconomic performance, and related discussions of policy, should pay greater attention to the potential diversity in regional performance.     

Determinants of Capital Structure: United Kingdom Versus Continental European Countries

In this paper, we analyze how country‐specific differences influence capital structure indirectly through firm‐specific variables. We apply a system Generalized Method of Moments technique to a panel data sample of companies from five countries (France, Germany, Italy, Spain and the United Kingdom) during the period 1998–2008. As the different financial systems of European economies (bank‐oriented or market‐oriented) may influence capital structure differently through firm‐specific variables, we first examine the determinants of capital structure for each country separately and we then analyze whether the observed differences between the United Kingdom and the continental European countries are relevant. The results show that there are substantial differences in the capital structure choices of firms across five major European countries. These differences are motivated by the type of financial systems of the countries (bank‐oriented and market‐oriented) and influence the capital structure indirectly through the firm‐specific variables. Overall, our results support the relevance of the differences in the capital structure choices of firms across five major European countries, and in particular, the singularity of the United Kingdom (a market‐oriented economy) as opposed to continental European countries (bank‐oriented economies).     

The Lee-Carter quantile mortality model

The Lee-Carter (LC) stochastic mortality model has been widely used for making future projections of mortality rates. In the framework of the LC model, the response function is non-linear in parameters. Here, we adapt this LC framework to compute conditional quantiles. The LC quantile model can be defined as quantile non-linear regression conditioned to age and the calendar year. Two strategies for estimating coefficients based on interior-point methods are described. We show that the LC quantile model provides additional information to that furnished by the traditional LC conditional mean. An application to Spanish mortality data is reported.