An Equilibrium Selection Theory of Monopolization

We develop a duopoly model in which firms compete for the market (e.g., investing in process innovation or product development) as well as in the market (e.g., setting quantities or prices). Competition for the market generates multiple equilibria that differ in the firms’ investment levels, relative size, and profitability. We show that monopolization that affects competition in the market can act as an equilibrium selection device in competition for the market. In particular, it eliminates equilibria that are undesirable for the monopolizing firm, while not generating new equilibria. This result complicates the task of determining whether a firm's dominance in a given market is the result of fair competition or unlawful monopolization. We discuss a number of implications for antitrust policy and litigation, and illustrate these by means of two well‐known antitrust cases.     

Changes in sponsorship value: Competencies and capabilities of successful sponsorship relationships

The sponsorship relationship has evolved considerably over the past few years. As a result, the value delivered to both sponsors and the sports entities with which they form relationships needed to be redefined. While some of these partners have made the necessary leap forward, some sponsors have also been confronted with resistance on the part of sport entities to adapt to evolving perceptions of value. Based on a qualitative study aimed at canvassing the views of some of the most prominent experts in the field and spanning 4 years and four continents, we document this evolution of sponsorship value and identify those key competencies that differentiate successful sponsors from less successful ones. Our research provides insights for other inter-firm relationships, particularly those in the service sector.     

Gentrification and Blight: Relationship to Involuntary Displacement

Because homelessness is visible in cities with high levels of gentrification, the media have linked the two phenomena. But the displacement taking place in most American cities is due more to blight than to gentrification. This article examines both sources of displacement and traces them to the same source: land speculation. In declining cities, land speculation causes parcels to be held vacant in prime locations, leading to disinvestment and an inadequate supply of affordable commercial and residential buildings. In cities with booming economies, land speculation leads to redevelopment of entire neighborhoods where land appreciates in value due to new commercial or residential demand. The solution to gentrification and blight as sources of displacement is to increase land value return and recycling to stabilize urban economies and avoid the boom-bust cycles that are so detrimental to cities.     

In Art we trust

Culture is an experience good and has strong externalities. Culture has social value, option value, existence value, innovation value, and intergenerational value. None of these are internalised by the market. One should avoid that culture appeals to a small elite. It is thus crucial to invest in cultural education, to bring culture to places where the people are, and to put a greater emphasis on demand-side rather than supply-side cultural subsidies. One should try to avoid that high culture becomes marginalised in a multicultural society with many demands on leisure time. The government should avoid deadweight losses, but should also minimise the potential for rent seeking and lobbying. It is crucial that the government stays at arm's length and leaves artistic judgements to independent experts and interested laymen.     

A two-stage approach to defining an affected community based on the directly affected population and the sense of community

Studies have demonstrated the inadequacy of relying on existing administrative boundaries or simple proximity to define an affected community. The proposal and siting of hazardous facilities can have a range of impacts upon people across wide areas, with some more affected than others as a result of living with the physical impacts of construction or the fear associated with perceived risk. We term those most affected the directly affected population and propose a two-stage model for identifying an affected community which places those most affected at the centre of the definition. The second stage is to identify the relationships those most affected have with the wider elements of the sense of community to discover the existing community or communities which are affected. Illustrated by the siting of a low-level radioactive waste disposal facility at Dounrey in the north of Scotland, we show that elements of the lived community experience may have very different shapes, extents and conflicting interests which pose challenges for their incorporation into a siting process. The two-stage model presented in this paper, by placing those most directly affected at the centre and working from there out into the existing communities, identifies issues early in any siting process to improve their incorporation and amelioration.     

The Oxford Handbook of Work & Organization – Edited by Stephen Ackroyd,Rosemary Batt,Paul Thompson and Pamela S.

Books reviewed: The Oxford Handbook of Work & Organization edited by Stephen Ackroyd, Rosemary Batt, Paul Thompson and Pamela S. Tolbert. Oxford University Press, Oxford, 2005, xiii + 655 pp., ISBN 0 19 926992 0, £75.00.     

Modelling employment durations of NHL head coaches: turnover and post‐succession performance

Match‐level National Hockey League (NHL) data are used to identify factors likely to trigger the departure of a team's coach, and to measure the short‐term impact on subsequent match results. There is a statistically significant link between individual match results and the job departure hazard for up to 15 games prior to the point of departure. The hazard depends on the team's current standing within its conference relative to a pre‐season forecast, recent performance in the Stanley Cup, the coach's age and previous employment with his present team as a player. After controlling for a mean‐reversion effect, teams that changed their coach within‐season are found to perform worse subsequently than those that did not, but the negative effect is short‐lived. Copyright © 2006 John Wiley & Sons, Ltd.     

Linear learning in changing environments

The decision maker receives signals imperfectly correlated with an unobservable state variable and must take actions whose payoffs depend on the state. The state randomly changes over time. In this environment, we examine the performance of simple linear updating rules relative to Bayesian learning. We show that a range of parameters exists for which linear learning results in exactly the same decisions as Bayesian learning, although not in the same beliefs. Outside this parameter range, we use simulations to demonstrate that the consumption level attainable under the optimal linear rule is virtually indistinguishable from the one attainable under Bayes’ rule, although the respective decisions will not always be identical. These results suggest that simple rules of thumb can have an advantage over Bayesian updating when more complex calculations are more costly to perform than less complex ones. We demonstrate the implications of such an advantage in an evolutionary model where agents “learn to learn.”