Technology revolutions in the presence of network externalities

The purpose of this paper is to investigate the effect of varying consumer preferences over technology advance and network size on the timing and frequency of new technology adoption in the presence of installed bases resulting from network externalities. The paper shows that the duration of each adopted technology and the frequency of technology adoptions depend on (a) whether (in consumers' perspectives) the network size effect is a substitute for or a complement to the quality of the technologies; (b) the degree of compatibility of new technologies with the old technology; and (c) the technology growth rate and consumer population size.     

Price competition when consumer behavior is characterized by conformity or vanity

It has long been recognized that the pleasure of consuming a good may be affected by the consumption choice of other consumers. In some cases, social pressures may lead to conformity; in some others, individuals may feel the need of exclusiveness under the form of vanity. Such externalities have proven to be important in several markets. However, the market implication of these externalities are still unclear. To investigate them, we propose to combine the consumption externality model and the spatial duopoly model. When conformity is present but not too strong, both firms remain in business but price competition is fiercer and results in lower prices. The market share of the large firm increases with the population size; as the population keeps rising, the large firm may serve the entire market and set a price that has the nature of a limit price. When conformity is strong enough, different equilibria may exist. In most of these equilibria, a single firm captures the whole market. At the other extreme, when vanity is at work, price competition is relaxed.     

The role of technical expertise in firm governance structure: evidence from chief financial officer contractual incentives

We provide evidence that the presence of technical expertise in firm governance structure reduces reliance on contractual incentives to control the potential agency problem for executives whose responsibilities require specialized knowledge. Specifically, we find that firms with financial expertise in the form of a board finance committee, or a chief executive officer with a financial background, tend to use lower levels of incentive‐based compensation for their chief financial officers. Our findings suggest financial experts provide stronger oversight and/or direction with regard to firm financial policies and strategies, thereby allowing firms to reduce reliance on incentive compensation. Our study provides insight into the role of technical expertise and board committees in firm governance, and into the benefits of common functional expertise within top management teams. Copyright © 2010 John Wiley & Sons, Ltd.     

On interpreting probability distributions fitted to times of first adoption

This paper attempts to interpret the standard statistical distributions in the innovation diffusion context. A simple rule is provided for classifying a statistical distribution as being an internal, an external, or a mixed influence model. Two distributions, suitable as flexible mixed influence models, are used to analyze several well-known data sets.     

The “Adjustable-curtain” Strategy: Overbooking of Multiclass Service

The “adjustable-curtain” strategy, now commonly practiced by many airline companies, refers to a strategy where the airline adjusts the size of the business-class section of the aircraft shortly before boarding takes place. This strategy enables the carrier to deny boarding of economy-class passengers in an event of a high show-up of business-class (high-paying) passengers by simply enlarging the business-class section at the expense of the economy-class section (and of course, the other way around, in a case of a low show-up of business passengers). This paper develops a simple method of computing a profit-maximizing reservation policy which determines the number of business- and economy-class bookings taking into account that the adjustable-curtain strategy will be utilized prior to boarding. Received July 27, 2001; revised version received October 5, 2001     

Not every public sector is a field: evidence from the recent overhaul of the English NHS

ABSTRACT

A structural interpretation of institutionalism has become dominant in public management research. Yet, studies tend to assume an institutional-level phenomenon without specifying how an organizational field was identified or whether structural characteristics can indeed be found in the organizational population studied. This lacuna is illustrated by exploring the structural interpretation of the field construct in the case of the recent overhaul of English primary care. Findings demonstrate the need for a more robust application of institutionalism in empirical research. Possible research problems for public management and a future research agenda based on a more relational approach to fields are discussed.     

Market structure and diversification of mutual funds

This study characterizes a systematic relationship between the diversification incentives and the market structure of the mutual funds industry with investors differentiated by their attitude towards risk. With sufficiently low competition the subgame perfect portfolio equilibrium exhibits maximal risk differentiation. With intensified competition intermediate funds, i.e., those attracting investors with intermediate attitudes towards risk, select diversified portfolios. Finally, we offer a general characterization of how imperfect competition between risk-differentiated funds will generate an equilibrium relationship between risk and expected returns.     

Shark bytes: message sensation value and emotional appeals in shark diving websites

Websites designed to promote risky activities provide a novel context for studying the role of emotional appeals and message sensation value (MSV) in risk messages in order to ultimately understand the type of messages that motivate people to engage in risk behaviors. Framed in theories of message design and emotion, this study investigates representations of threat, efficacy, and the extent to which risk messages appeal to a range of positive and negative emotions through the examination of 53 shark diving websites using content analysis and computer generated linguistic analysis. Results indicate that few websites provide explicit threat information (i.e. severity and susceptibility) but many do present implicit threats. Efficacy-related messages were present on all websites. Positive emotion was more common than negative emotion and there is little representation of the traditional components of MSV. Implications for theory development and communication about risk-seeking are addressed.     

Dynamic models of religious conformity and conversion: Theory and calibrations

This paper develops overlapping generations models to explain and simulate changes in the proportion of secular and religious people. The church is modeled as generating an externality associated with “conformity-enhancing” education. Observed changes in the number of nonbelievers are explained by different birth rates among secular and religious parents and the relative proportion of young nonconformists. Calibrations for the conformity rates among secular and religious people show that the observed long-run increase in the difference between percentage of secular people in Europe and the United States can be attributed to lower conformity rates prevailing in Europe.