The Size of Firms and R&D Investment

We construct an industry-equilibrium model in which it is costly for consumers who have previously purchased from one firm to switch to competitors. This gives firms a certain degree of market power over their established customers. The equilibria we identify under these conditions have the following properties: (1) there is a nontrivial size distribution of firms, although firms are intrinsically identical, (2) larger firms make higher profits, (3) larger firms spend more on R&D, (4) larger firms charge (on average) lower prices, and (5) profits are positively correlated over time. These properties match empirical regularities concerning the manufacturing and retail sectors in the U.S. economy.     

Permanent and transitory wages of British men, 1975–2001: year,age and cohort effects

We examine the mean and variance–covariance structure of log-wages over calendar time and the life cycle of British men, hereby controlling for birth cohort effects. We attribute the strong increase in mean log-wage during the 1980s and 1990s to a rise in mean log-wage with the year of birth. This rise is diminishing with the year of birth, which implies lower wage inequality between cohorts with the year of birth. Wage inequality has increased during the 1980s and early 1990s and remained fairly stable in the second half of the 1990s. The year effects, however, show increasing wage inequality up to 2001, mainly due to a strong rise in transitory wage inequality. Transitory wages are strongly correlated over time and an increase in transitory wage inequality therefore has highly persistent inequality consequences. The stable wage inequality in the second half of the 1990s is attributed to lower within-cohort wage inequality for the younger cohorts. The age effects show that permanent wage inequality increases with age, in particular up to age 30 and over age 50. Copyright © 2007 John Wiley & Sons, Ltd.     

Social capital and soil conservation: evidence from the Philippines*

The formation of social capital is hypothesised to enhance collective efforts for soil conservation. The Landcare Program in the southern Philippines promotes simple conservation practices in upland environments by supporting community landcare groups and municipal landcare associations, thus augmenting social capital. A study was conducted in 2002–2003 to evaluate the Landcare Program, using a mix of quantitative and qualitative techniques. In the present paper, the relationship between social capital formation and adoption of soil conservation in the Municipality of Lantapan is investigated. It is concluded that the Landcare Program as a whole created a valuable stock of bridging social capital, rapidly accelerating the adoption of contour farming measures, but that on‐going support is needed to maintain this capital stock.     

Trade and invasive species risk mitigation: Reconciling WTO compliance with maximising the gains from trade

This paper analyses the issue of balancing the gains from trade with the risk of pest and disease transference. Two decision frameworks for determining whether or not to permit trade in a potentially invasive species-carrying good are presented. The first considers only the potential production losses resulting from an invasive species entering through a trade pathway, as is prescribed by WTO compliance. The second is a unilateral welfare-maximising approach which considers the consumer gains from trade, the loss of domestic producers’ market share and expected damage from the invasive species. It is shown that these alternative decision frameworks can be reconciled such that they produce the same outcome regarding whether or not trade is to be permitted. The key parameters which influence these decisions are also highlighted.     

Targeting Monitoring Resources to Enhance the Effectiveness of the CAP

From its inception the operation of the CAP has required the compliance monitoring of farming activities and anticipated increases in the complexity of the monitoring tasks with the introduction of the SFP will stretch monitoring resources even further. We outline the scope for using targeting to enhance effectiveness of monitoring resources in dealing with non-compliant behaviour. Targeting resources can increase information on particular groups making identification of inappropriate behaviour easier. However, in reallocating monitoring resources towards the targeted sub-group, there is likely to be an associated reduction in resources allocated to monitoring non-targeted agents and therefore an increase in their incentive to cheat. To reduce this problem we suggest balancing the targeting-induced reduction in the probability of being caught cheating for non-targeted agents with an appropriate increase in the penalty for those agents if they are caught cheating. This increase in penalty results in an increased divergence between the outcomes from being caught or not caught cheating for non-targeted agents, which increases the overall perceived risk of the cheating option. And for risk-averse agents, this increase is a disincentive to cheating. On this basis we argue for greater use of target-based compliance monitoring as part of the revised and evolving CAP.     

Decision making for business model development: a process study of effectuation and causation in new technology-based ventures

This study investigates the decision-making logics used by new ventures to develop their business models. In particular, they focussed on the logics of effectuation and causation and how their dynamics shape the development of business models over time. They found that the effectual decision-making logic was used dominantly to generate a viable value proposition for a specific customer segment. Causal logic is then used dominantly to define the other business model components in relation to the value proposition and customer segment. When a shortage of resources emerges, causal logic is replaced by an increase in effectual decision-making again. They concluded that before investing significant resources in a business model it was crucial for firms to reduce, as far as possible, technological and market uncertainty through effectual strategies to avoid high re-configuration costs later.     

UK Asian communities: A profitable market for nonprofits?

The ethnic minority communities in the UK are an increasingly powerful force. But UK charities have not had a great deal of experience in approaching this market, despite a readily acknowledged desire to increase their own levels of cultural diversity. How many want a better ethnic representation among their donor base? How many want greater cultural diversity among volunteers, let alone staff? This paper examines the Asian communities within the UK, and suggests that these are groupings with which UK charities should be engaging. The communities are identifiable, with strong philanthropic traditions, they have increasing economic power and they are accessible. The paper also looks briejly at a positive response generated by one organisation-the Aga Khan Foundation (UK) — to a non-denominational, intercommunal appeal for funds from the Asian Communities in the UK.     

“Panelizing” Repeated Cross Sections

This paper considers the implementation of a non-stationary, heterogeneous Markov model for the analysis of binary dependent variables in a time series of repeated cross-sectional (RCS) surveys. The model offers the opportunity to estimate entry and exit transition probabilities and to examine the effects of time-constant and time-varying covariates on the hazards. We show how maximum likelihood estimates of the parameters can be obtained by Fishers method-of-scoring and how to estimate both fixed and time-varying covariate effects. The model is exemplified with an analysis of the labor force participation decision of Dutch and West German women using ISSP (and other) data from 10 annual Dutch surveys conducted between 1987 and 1996 and 7 annual West German surveys conducted between 1988 and 1994. Some open problems concerning the application of the model are discussed.