Leading and Merging: Convex Costs,Stackelberg, and the Merger Paradox

This paper examines the consequences of a Stackelberg leader merging with followers when costs are convex. Such mergers are always profitable for the participants, and the followers often do better merging than remaining excluded rivals. This resolution of the merger paradox cannot be generated either by Stackelberg leadership without convex costs or by convex costs without leadership. In addition, with convex costs, a merger with the leader can actually harm excluded rivals (suggesting why they might object to the merger) and increase social welfare.     

A Note about the Relationship among Transaction Costs,Institutions and Productivity Growth

In order to test the Fuess and van den Berg [I9921 hypothesis on the influence of the increasing transactions sector's costs on the total factor productivity growth rate, the authors perform calculations and estimates of the Solow'S residual for both the total GNP and the non-transactions GNP on Italian data covering the period 1951-89. The results suggest that, as regards the Italian economy, the difference between total and non-transactions productivity growth rate (effect of institutions on material production), rather than having a constant positive sign, as in the findings of Fuess and van den Berg, alternates between negative and positive sign.     

Trends in Total Advertising Expenditure in 16 Countries, 1970–1981

Television advertisements deal with a host of human problems by identifying a problem or cultivating a perception that a problem exists, then demonstrating the capacity of a product to resolve that problem. This study examines the nature of problems and their resolutions on prime-time television. Findings reveal that the problem-presentation, problem-resolution format is extremely prevalent among television advertisements. Further, these advertisements deal with only a narrow range of human needs, and they often exaggerate the magnitude and urgency of problems in a way that makes them appear larger than life. Resolutions are depicted to be easy and quickly implemented, and are portrayed to resolve the problem with a high degree of certainty. These findings are discussed in terms of cultivation theories.     

Disaster relief routing: Integrating research and practice

Disaster relief presents many unique logistics challenges, with problems including damaged transportation infrastructure, limited communication, and coordination of multiple agents. Central to disaster relief logistics is the distribution of life-saving commodities to beneficiaries. Operations research models have potential to help relief agencies save lives and money, maintain standards of humanitarianism and fairness and maximize the use of limited resources amid post-disaster chaos. Through interviews with aid organizations, reviews of their publications, and a literature review of operations research models in transportation of relief goods, this paper provides an analysis of the use of such models from the perspective of both practitioners and academics. With the complexity of disaster relief distribution and the relatively small number of journal articles written on it, this is an area with potential for helping relief organizations and for tremendous growth in operations research.     

Pricing Perpetual Options for Jump Processes

Abstract

We consider two models in which the logarithm of the price of an asset is a shifted compound Poisson process. Explicit results are obtained for prices and optimal exercise strategies of certain perpetual American options on the asset, in particular for the perpetual put option. In the first model in which the jumps of the asset price are upwards, the results are obtained by the martingale approach and the smooth junction condition. In the second model in which the jumps are downwards, we show that the value of the strategy corresponding to a constant option-exercise boundary satisfies a certain renewal equation. Then the optimal exercise strategy is obtained from the continuous junction condition. Furthermore, the same model can be used to price certain reset options. Finally, we show how the classical model of geometric Brownian motion can be obtained as a limit and also how it can be integrated in the two models.     

Effect of supervisor–subordinate guanxi on supervisory decisions in China: an empirical investigation

As China is becoming an important market and there are a lot of foreign ventures operating there, different lines of research have been providing useful information for foreign ventures to manage effectively in China. In this paper, we discuss one of the critical factors leading to successful management of Chinese subordinates, i.e. building and maintaining good guanxi (i.e., interpersonal connection) with them. We conducted an empirical investigation to illustrate (1) the supervisor-subordinate guanxi concept is different and unique when compared to other similar concepts in the Western literature such as leader-member exchange (LMX) and commitment to supervisor; (2) the supervisor-subordinate guanxi will affect the Chinese supervisor's administrative decisions; (3) guanxi can be measured by concrete behaviour/activities. Data on 189 supervisor-subordinate dyads were collected in the People's Republic of China (PRC). Results indicated that supervisor-subordinate guanxi is a distinct concept from LMX and commitment to supervisor. It also has additional explanatory power over supervisory decisions on promotion and bonus allocation after controlling for performance. Implications for foreign ventures and expatriates are discussed.     

TECHNICAL NOTE : THE VARIABLE FINANCIAL INDICATOR IRR AND THE CONSTANT ECONOMIC INDICATOR NPV

The IRR (internal rate of return) and the NPV (net present value) are the two most common and important indicators in investment decisions. These two indicators, however, have intrinsic differences between one another. The IRR is a financial indicator and the NPV an economic indicator of a capital investment. The former gives the private investor's point of view and the latter the society's point of view. The value of ERR varies with the change of Financial arrangement of an investment. The NPV, however, does not but remains constant no matter how the financial arrangement changes. This paper uses an illustrative example to show their intrinsic differences and then describes a mathematical proof to substantiate the different natures of IRR and NPV.