Strategic managerial incentives in a two-period Cournot duopoly

This paper examines the nature of optimal managerial incentives in the context of a duopoly marked by competition between the firm's managers in a dynamic production environment. If the marginal cost of production falls moderately over time or remains unchanged, there exists an equilibrium where one owner requires her manager to maximize profit, whereas the rival-owner requires her manager to maximize sales revenue. The profit-maximizing manager turns his firm into a Stackelberg-leader, while the sales-revenue-maximizing manager turns his firm into a Stackelberg-follower. Further, the profit-maximizing manager may generate a larger firm profit relative to the sales-revenue-maximizing manager.     

Task-Based Segmentation of Rural Labour Contracts: Theory and Evidence

The paper examines the theoretical and empirical validity of task-based segmentation of rural labour contracts in seasonal agriculture. Regular labour is hired to perform tasks that are difficult to supervise for which casual labour is not incentive-compatible, and a regular wage above the reservation wage ensures no shirking in these tasks. It is argued that there is a hoarding cost of regular labour which is the cost when productivity is low during the slack season. This implies that minimization of supervision costs necessitates the employment of regular labour in certain tasks, but enhances hoarding cost. Results from the ICRISAT villages in India suggests that daily regular wages are lower than daily casual wages, adjusted by the probability of unemployment. Estimates of a tobit selection model suggest that (a) task characteristics are not significant even among the farms hiring regular labour, (b) larger employment-intensive farms tend to hire more regular labour irrespective of the choice of crop, and (c) there is a significant substitutability between regular and family labour. These results seem to question the very basis of task-based segmentation and strengthen the hoarding cost argument: farms hiring regular labour use it indiscriminately in both non-monitorable and monitorable tasks and, if possible, they may substitute family labour for regular labour with a view to minimizing hoarding cost.     

Equal Pay for Unequal Work: Limiting Sabotage in Teams

We demonstrate the value of "equal pay" policies in teams, even when team members have distinct abilities and make different contributions to team performance. A commitment to compensate all team members in identical fashion eliminates the incentive that each team member otherwise has to sabotage the activities of teammates in order to induce the team owner to implement a more favorable reward structure. The reduced sabotage benefits the team owner, and can secure Pareto gains under plausible circumstances.     

IMPACT OF COMMUNIST PARTIES ON THE INDIVIDUAL DECISION TO JOIN A TRADE UNION: EVIDENCE FROM INDIA

This paper analyzes the impact on individual decisions to unionize of several factors: the reach of communist parties, the degree of political activism, personal attributes of workers, and industrial characteristics. The workers examined are Indian nonagricultural regular workers, using micro-data from the 2004–5 Employment and Unemployment Survey conducted by the National Sample Survey Organisation, linked to state-level factors. A notable result is that the reach of communist parties has considerable effect on unionization probability. Moreover, it seems that the mere existence of communist parties in a state also facilitates unionization to some extent. State-level political activism and unemployment rate also influence the individual decision to join a union. The paper concludes also that a worker's gender, marital status, ethnic background, employment status, experience, occupation, sector of employment, establishment size, and type of industry remain important in the determination of union membership.     

Are less-favored environments over-invested? The case of rice research in India

Allocation of research resources between favorable and unfavorable rice-growing environments is analyzed in this paper using the case of India. The resource allocation in rice research for all ecosystems of India is approximated by the full-time equivalent (FTE) of scientist time spent in research. This was estimated through a survey of all major public research organizations involved in rice research. The FTEs were adjusted for any cost differences per scientist time across the rice growing environments. Unadjusted FTEs indicated a high congruence in resource allocation while adjusted FTEs showed slight under investment in rainfed environment. The use of equity weights amplified the extent of under investment in rainfed environments. It is concluded that, in the case of rice research, rainfed environments in India remain under-invested moderately. Options for addressing this imbalance and the overall implications for resource allocation are discussed.     

The Effect of Inequality on Growth: Theory and Evidence from the Indian States

The paper examines the effect of inequality on growth among the subnational states in India. Theoretically, growth of the regional economy is driven by productive public investment in the provision of health and education services financed by a linear output tax, and the optimum tax rate is determined by the median voter. In contrast to existing results, the authors obtain an ambiguous relationship between initial inequality and subsequent economic growth. Analysis of the Indian state‐level data suggests that rural inequality influences growth of total output more than urban inequality, and does so negatively. The indicator of intersectoral inequality is more important in explaining sectoral output growth.     

Entry Threats and Inefficiency in ‘Efficient Bargaining’

We study limit pricing in a model of entry with asymmetric information, where the incumbent firm's wage is endogenously determined through ‘efficient bargaining’ with its union. In the presence of entry threat, the incumbent firm‐union pair may face a conflict between rent sharing and transmitting its cost information. When the wage is not observable to outsiders and employment is the only signalling instrument, over‐employment features in all entry deterring contracts. When the wage is also observable, information transmission becomes easier. Most of the time, then, but not always, the efficient contract deters (induces) entry against the low (high) cost incumbent.     

Identifying Key Success Factors for Social Enterprises Serving Base‐of‐Pyramid Markets through Analysis of Value Chain Complexities

There are people in this world who have little or no access to basic needs and they struggle financially, living on less than a handful of dollars a day. A better understanding of how to supply/serve the world's poor is needed. In this paper, through the lens of Porter's value chain framework we investigate the challenges and opportunities social enterprises face in base‐of‐pyramid (BoP) markets based on secondary data on 23 organizations. Our contribution is twofold: First, we analyze value chain complexities for the social enterprise based on the value creation role (consumer, coproducer) and income level (poverty, extreme poverty) of the local population. We find that nature of customers’ requirements varies across customer segments in the BoP markets and social enterprises face unique challenges in fulfilling such differentiated demand patterns. Second, we develop an affordability–accessibility framework that helps to identify the situations that may be favorable/unfavorable for social enterprises to meet the challenges in BoP markets. We make four propositions that social enterprises may use to cope with difficulties in affordability and accessibility. Our findings will be useful for such organizations to understand and design better supply chains for the base of pyramid.