International Benchmarking for Monopoly Price Regulation: The Case of Australian Gas Distribution

Price-cap regulation is widely applied to network industries. However, regulators often encounter the problem of asymmetric information on efficient costs. Benchmarking can help reduce this problem. We present a benchmarking analysis, conducted for an Australian regulator, that derives measures of efficiency for Australian gas distributors relative to U.S. counterparts. Several techniques, such as data envelopment analysis and stochastic frontier analysis, are used to ensure that our measures are robust to methodology choice. We conclude with a discussion of how the regulator used the benchmarking results, along with other information, to help it determine appropriate price caps.     

A Theory of Constitutional Standards and Civil Liberty

Why would potentially intolerant majorities in a democracy protect the rights of unpopular groups? This paper models the formation of legal standards that determine the extent of civil liberty in a society. It is shown that tolerant legal standards emerge over time, despite all individuals having intolerant preferences. Each period citizens choose activities that have social consequences. A majority vote determines which of these activities are legally protected. Because of errors in interpreting the symbolic content of these activities, voters from the majority will not impose excessively intolerant standards, otherwise they may end up severely punishing members of their own group by mistake.
Extending this framework to a dynamic model, we examine Markovian equilibria of the game when government improves with time in its ability to correctly interpret citizens' activities. These improvements allow an unchanging majority to impose increasingly intolerant standards over time. It is shown that societies with high political turnover due to population changes are apt to choose tolerant legal standards. Societies with low turnover are more apt to choose more intolerant and unstable ones. Each group seeks to prevent auditing capabilities of government from improving too much over time in order to prevent future majorities from successfully enforcing more intolerant standards.     

RENOVATIO MONETAE: WHEN GESELL TAXES WORKED

Gesell taxes on money have recently received attention as a way of alleviating the zero lower bound on interest rates. Less known is that such taxes generated seigniorage in medieval Europe for around two centuries. When a Gesell tax was levied, current coins ceased to be legal and had to be exchanged into new coins for a fee. Using a cash-in-advance model, we analyze under what conditions agents exchange coins and the tax generates revenues. A low exchange fee, high punishments for using old coins, and a long time period between re-mintings induce people to use new coins.     

Exploiting innovative opportunities in global purchasing: An assessment of ethical climate and relationship performance

Purchasing managers are expected to balance costs, innovation, supplier management, and corporate social responsibility while coordinating expanding areas of the corporation. The increased responsibilities and pressures to innovate brings purchasing managers into potentially increasingly difficult ethical dilemmas. In this study, we examine the relationships between organizational culture, learning, entrepreneurial innovation, and purchasing outcomes in different ethical climates. To address external business conditions that may influence innovation in purchasing, we also examine the moderating effects of technological and market turbulence. Data from 200 purchasing managers in multinational corporations were used to test the relationships through structural equation modeling. We find that entrepreneurial innovation positively affects the quality of the relationships among sourcing participants when operating in a climate valuing ethics. The study results are particularly relevant for managers concerned that establishing an ethical climate may restrict innovation in the purchasing process.     

A Note on Trading Stamp Strategy

A Special class of promotions where the consumer is invited to play a game, receive trading stamps or accept gifts has continually elicited reactions from economists, congressional investigators and certain consumer groups. Furthermore, many of these promotions are condemned by their originators, yet they persist! I submit that our ability to effectively treat the problem has been limited by a lack of theoretical understanding of the fundamental causes and features that underlie such promotions. This paper is an attempt to provide a general theory of these cases which I have titled the oligopolistic ‘lock-in’.

Government intervention may often be necessary for the dissolution of the ‘lock-in’, but while firms may wish to free themselves from its grip, unfavorable publicity from such intervention has historically forced them to defend the status quo. In such cases, an ounce of prevention is worth a pound of cure: if managers in industries where the ‘lock-in’ can exist understand the phenomenon, they can (hopefully) avoid its dilemma. Likewise, economists concerned with the public policy aspects can treat the causes rather than the symptoms.     

Micro evidence on international patenting

Globalization, high growth rates in high-tech industries, growing emerging markets and harmonization of patent institutions across countries have stimulated patenting in foreign markets. We use a simple model of international patenting, where the decision to patent in a foreign country depends on country characteristics and the quality of the patented invention. With access to a detailed database on individual patents owned by small Swedish firms and inventors, we are able to estimate some of these relationships and test their validity. Our results indicate that the propensity to apply for international patent protection increases with indicators of the quality of the invention, technological rivalry and market size in the host market.     

The Organization of Innovation Brokers: An International Review

Research on networks of innovation has typically focused on relationships of competition and collaboration between firms in the network, sometimes extending the analysis to sources of new ideas such as universities. More recently, attention has been paid to the activities of intermediaries in such networks, which facilitate the innovation process, which are positioned between the sources and users of innovations. This paper focuses on the organization of a distinctive type of intermediary, which we have defined as an innovation broker, by providing an analysis of 10 case studies of organizations dedicated to innovation broking from around the world. Innovation brokers in our definition are organizations that are founded especially to undertake an intermediary role, rather than performing that role as a by-product of their principal activities. The results of this analysis suggest that the key role played by innovation brokers in the innovation process is the independent validation of new ideas, thereby facilitating diffusion. In order to carry out this task, innovation brokers are organized on a not-for-profit basis, typically as a public–private partnership. The paper concludes by discussing the implications of the findings for innovation theory and research in networks of innovation.