‘Better late than never’: the interplay between green technology and age for firm growth

Small Business Economics - This paper investigates the relationship between green/non-green technologies and firm growth. By combining the literature on eco-innovations, industrial organisation and...     

TIMING OF LUMPY INVESTMENT,PRICING AND TECHNICAL PROGRESS

In equipment‐intensive sectors – such as water utilities, power generation, and gas – billions of dollars are spent in capital equipment. The nature of the investment is often lumpy: at some point a plant has to be replaced and a large investment is required. We characterize the dynamic optimal investment policy of profit‐maximizing and welfare‐maximizing firms. We first show that, when there is no technical progress, the duration of the plant is longer for a profit‐maximizing firm. We then consider technical progress leading to either capacity expansion or to operating costs reduction. We show that duration tends to increase when the installed capacity increases over time, while it tends to decrease when technical progress reduces operating costs, both for profit‐maximizing and welfare‐maximizing firms. Under some conditions, when capacity expands over time the duration of the plant is longer for a profit‐maximizing firm than for a welfare‐maximizing firm.     

Message Reframing in Advertising

Various communication techniques such as humor or two‐sided argumentation are frequently used in advertising. One technique that is common but has not been conceptualized is the deliberate change of perspective of specific product or brand attributes. Based on the reframing method used in neuro‐linguistic programming (NLP) this technique is conceptualized as message reframing, defined as a communication technique that changes the conceptual and/or emotional setting or viewpoint in relation to how a brand is experienced by placing it in a different frame that fits the same brand equally well or better. The effects of message reframing in contrast to conventional advertisements as well as in contrast to humor and two‐sided argumentation are hypothesized and tested in an experimental study. The results reveal that message reframing outplays traditional advertising techniques regarding attention toward the ad, perceived novelty, attitude toward the ad, and attitude toward the brand. Moreover, message reframing does not show the deterioration of source credibility commonly observed in humorous messages, and leads to higher attention, perceived novelty, and attitude toward the ad than two‐sided messages.     

Sportsbooks and politicians: Place your bet!: Teaching note

This case exposes students to strategy issues for an electronic business that is subject to a particularly complex set of laws and regulations. This note explains the teaching objectives of the case and how to use the case in class. Instructors can organize its discussion around four questions which guide the students from the analysis of the industry and a characterization of different forms of competition in sports gambling, to the strategy of BetonSports and the political calculations that serve as basis for this strategy. A more complete teaching guide is available from the authors upon request.     

Marktabgrenzung und Marktbeherrschung auf Elektrizitätsmärkten

This article presents the current market definition in the different electricity markets as applied by the Bundeskartellamt (Federal Cartel Office). The market definition has been modified recently due to an increasing intensity of competition. The main focus is on the definition of the relevant product and geographic markets at the end consumer level. Moreover, the article considers implications of the market definition for competition policy.     

Applying importance sampling for estimating coherent credit risk contributions

A Monte Carlo simulation method based on importance sampling is applied to the problem of determining individual risk contributions of the obligors in a credit portfolio. The effectiveness of the method is benchmarked against standard Monte Carlo techniques and the asymptotic optimality of the method is proved. The risk measure adopted is expected shortfall, a particualr coherent risk measure. The concept of a coherent risk spectrum is discussed on the basis of some numerical examples.     

Technological Profiles And Economic Performance In The Italian Manufacturing Sector ∗

This paper applies multivariate analysis to a rich data set on technological innovation, in order to identify typical patterns of technological change. To single out the dominant forms of technological behaviour, twelve variables have been selected approximating firms' technological sources and innovation results. Multivariate analysis was applied to identify six main clusters or dominant technological profiles. Each cluster was then interpreted on the basis of a larger set of variables concerning firms' technological and economic performance. The results confirm recent emphasis placed by scholars of technical change on variety of bchaviour in technical change and industrial organization and, more specifically, Pavitt's seminal attempt at a classification of this variety. However, our clusters are somewhat more numerous than Pavitt's, thus showing a more complex combination of technological input and output. Moreover, representative industries of each cluster are less easily recognized as a less marked sectoral characterization of clusters emerges. The latter result seems to imply that variety in technological change is also shown by the existence of different technological trajectories and strategies within the same sector. We suggest that the diffuse nature of recent technical change has given firms greater freedom of strategic choice among different technological strategies.     

Unique Implementation of the Full Surplus Extraction Outcome in Auctions with Correlated Types

In auctions with correlated types it is possible to design mechanisms such that full surplus extraction can be obtained as the outcome of an equilibrium in which agents use (weakly) dominant strategies. However, it is not assured that the outcome is unique. We present an example in which no mechanism can yield the full surplus extraction outcome as the unique Bayesian equilibrium outcome. Next we show that in the standard auction model the multiplicity problem can be fully resolved using sequential mechanisms, i.e., we show that it is possible to obtain the full surplus extraction outcome as the unique perfect Bayesian equilibrium outcome.Journal of Economic LiteratureClassification Numbers: D44; D70.     

EFFICIENT MECHANISMS FOR MERGERS AND ACQUISITIONS*

We characterize incentive‐efficient merger outcomes when payments can be made both in cash and stock. Each firm has private information about both its stand‐alone value and a component of the (possibly negative) potential synergies. We study two cases: when transfers can, and cannot, be made contingent on the value of any new firm. When they can, we show that redistributing shares of any nonmerging firm generates information rents and provides necessary and sufficient conditions for the implementability of efficient merger rules. When they cannot, private information undermines efficiency more when it concerns stand‐alone values than synergies. Here, acquisitions emerge as optimal mechanisms.