Economic viability of private commons: Framework and guidelines for profitability

Ongoing regulatory reforms have led to several novel spectrum sharing models under the general umbrella of dynamic spectrum sharing. The private commons model introduced by FCC in 2004 allows spectrum licensees to provide secondary access to spectrum on an opportunistic basis while retaining ownership. Since wireless communication systems are typically overprovisioned in order to deliver service-level guarantees to (primary) users under short-term load variations, this model bears significant potential by facilitating utilization of temporal and spatial surplus of capacity through serving secondary users at possibly different service levels. A potential barrier to adoption of the private commons model is the uncertainty about secondary price–demand relationship which is difficult to predict in an emerging market: A selected price for secondary access may be profitable for some values of secondary demand but not for others, leading to a profound uncertainty about ultimate benefit of spectrum sharing. This paper aims to eliminate such an uncertainty by devising concrete guidelines and methods for profitability. The paper establishes that the price of secondary spectrum access can be chosen to guarantee profitability for any value of secondary demand: It is shown that for both the coordinated and uncoordinated commons regimes a profitable price should exceed a threshold value, which can be calculated. Hence profitability of private commons is insensitive to the demand function. This observation has two complementary interpretations: From a business perspective it provides a constructive approach to profitability; and from a regulatory perspective it provides reassurance that private commons is a healthy model. The paper also leverages the insensitivity property and outlines a technique to further enhance revenue via iterative spectrum offerings.     

Trans‐Tasman Transmission of Government Spending Shocks

This paper investigates the international transmission of fiscal shocks between two closely‐linked, open economies. We estimate impulse response functions using a semi‐structural vector auto regressive (VAR) model and quarterly data from Australia and New Zealand for the period 1973:3–2008:4. We compare our empirical results with impulse response functions from a calibrated two‐country international real business cycle model with habit formation and adjustment costs to investment. We show that a positive shock to Australian government consumption leads to an increase in Australian output initially and then to a decline in the medium term, while the New Zealand output is negatively affected both in the short and medium term. This result is in line with the recent literature that reports beggar‐thy‐neighbour effect of positive government spending shocks.     

Intermarket efficiency: An application of interbattery APT to mortgage-backed securities

Increasing popularity of investments in mortgage-backed securities has led to closer integration of the mortgage market into traditional capital markets. Using monthly returns during 1982–1988 for common stocks, Treasury bonds and GNMA and FHLMC mortgage-backed securities, the interbattery factor analytic Arbitrage Pricing Theory of (Cho, 1984) is used to test five hypotheses for intramarket and intermarket integration. Results indicate that three to five common factors are found within the same security market, while only one to three factors are found common between different markets.The APT could not be rejected within the same security market, but was rejected in most intermarket comparisons. While risk-free rates are found to differ between markets, the risk premium tests are conclusive indicators of integration. Our results support claims that the stock, bond, and the mortgage-backed securities markets are integrated.     

Preparing for evil

How can you plan for every crisis that might occur, even for ones you can't imagine? The task seems so daunting and so limitless that many firms don't even start. In fact, as the authors' 20 years of research shows, three out of four Fortune 500 companies are prepared to handle only the types of calamities they've already suffered, and not even all of those. That's unfortunate because the research also shows that crisis-prepared companies fare better financially, have stronger reputations, and ultimately stay in business longer than their crisis prone counterparts. Crisis-prepared companies use a systematic approach to focus their efforts. In addition to planning for natural disasters, they divide man-made calamities into two sorts--accidental or "normal" ones, like the Exxon Valdez oil spill, and deliberate or "abnormal" ones, like product tampering. Then they take steps to broaden their thinking about such potential crises. They consider threats that would be common in other industries, for instance. And they seek input from outsiders such as investigative journalists and even reformed criminals. But if these companies think broadly about possible threats, they think narrowly about implementation. Each year, smart companies focus their resources and attention on a few facilities picked at random, just as airlines conduct detailed security checks on just a few passengers for each flight. That reduces the probability of an attack on the entire organization even as it allows the business to migrate steadily to a higher level of crisis readiness. Crisis-prepared companies know that disasters cannot be managed through cost-benefit analyses. It is precisely because the effects of a disaster cannot be predicted or controlled that smart companies focus their efforts on preventing crises rather than containing them after the fact.     

OPTIMAL MONETARY POLICY WITH THE STICKY INFORMATION MODEL OF PRICE ADJUSTMENT: INFLATION OR PRICE‐LEVEL TARGETING?

I investigate the optimal monetary policy in a New Keynesian macroeconomic framework with the sticky information model of price adjustment. The model is solved for optimal policy, and welfare implications of three alternative monetary policy regimes under this optimal policy are compared when there is a cost‐push shock to the economy. These monetary policy regimes are the unconstrained policy, price‐level targeting and inflation targeting regimes. The results illustrate that optimal policy depends on the degree of price stickiness and the persistence of the shock. Inflation targeting emerges as the optimal policy if prices are flexible enough or the shock is persistent enough. However, the unconstrained policy or price‐level targeting might be preferable to inflation targeting if prices are not very flexible and the shock is not very persistent. The results also show that as prices become more flexible, the welfare loss usually gets bigger.     

Linking learning and effective process implementation to mass customization capability

This study investigates the role of learning and effective process implementation in the development of mass customization capability. Building upon the knowledge-based view of the firm, we argue that internal and external learning are two knowledge-generation routines that contribute to effective process implementation. Effective process implementation, in turn, is a knowledge-based manufacturing capability, which, as a function of internal and external learning, leads to mass customization capability. We employ structural equation modeling to empirically test the effects of learning on mass customization capability, mediated by effective process implementation, using survey data collected from 100 manufacturing plants in 3 industries and 6 countries. Our results provide empirical evidence supporting the proposed model of the effect of internal and external learning on mass customization capability, fully mediated by effective process implementation. This research is one of the first studies to integrate insights from the knowledge-based view of the firm and mass customization. It complements the OM view of mass customization, which to date has largely focused on the technical side, by demonstrating the role of managerial practices and learning in cultivating mass customization capability in a manufacturing environment.     

Experience Matters? The Impact of Prior CEO Experience on Firm Performance

We sample CEOs of the 2005 S&P 500 corporations to look at the relationship between experience in the CEO position of a different firm and the post‐succession financial performance of the firm that they currently lead. We find that experience in the CEO position is negatively related to firm performance. CEOs who directly move to their current CEO position from the previous one and those with job‐specific experience in the same or related industry or at the helm of a previous company similar in size to the current one are associated with significantly lower post‐succession performance than those without prior CEO experience. The results contribute to the literatures on CEO succession, the performance effect of job‐specific experience, and the transferability of human capital. © 2014 Wiley Periodicals, Inc.