Internet peering as a network of relations

This paper applies results from recent theoretical work on networks of relations to analyze optimal peering strategies for asymmetric Internet Service Providers (ISPs). From a network of relations perspective, ISPs’ asymmetry in bilateral peering agreements need not be a problem, since when these form a closed network, asymmetries are pooled and information transmission is faster. Both these effects reduce the incentives for opportunism in general, and interconnection quality degradation in particular. The paper also explains why bilateral monetary transfers between asymmetric ISPs (Bilateral Paid Peering), though potentially good for bilateral peering, may have negative effects on the sustainability of the overall peering network.     

Works Councils and Labour Productivity: Looking beyond the Mean

After more than 25 years of empirical investigation, the analysis of works council effects on establishment productivity is still an active field of economic research. I present first evidence for works council regression coefficients along the unconditional log labour productivity distribution in Germany. The highest (lowest) coefficients were found at the bottom (top) of the distribution, which suggests that works councils have the most beneficial effects at low levels of productivity. Importantly, coefficients are positive at each productivity level. The results shed light on a classical theoretical argument concerning moderating factors for the productivity effect of employee participation.     

Welfare Analysis of Regulating Mobile Termination Rates in the U.K.

We develop a calibrated simulation model of the U.K. mobile telephony market and use it to analyze the effects of reducing mobile termination rates (MTR's) as recommended by the European Commission. We find that reducing MTR's is likely to increase both consumer surplus and networks' profits. Depending on the strength of call externalities (i.e., benefits to the recipient of a call), social welfare may increase by as much as £1 billion to £4.6 billion per year. We also use the model to estimate the welfare effects of the 2010 merger between Orange and T‐Mobile and find that the merger led to a substantial reduction in consumer surplus.     

Takeover defenses,innovation, and value creation: Evidence from acquisition decisions

The desirability of antitakeover provisions (ATPs) is a contentious issue. ATPs might enable managerial empire building by insulating managers from disciplinary takeovers. However, some companies, such as “hard‐to‐value” (HTV) companies, might trade at a discount due to valuation difficulties, thereby exposing HTV companies to opportunistic takeovers and creating agency conflicts of managerial risk aversion. ATPs might ameliorate such managerial risk aversion by inhibiting opportunistic takeovers. This paper analyzes acquisitions made by HTV firms, focusing on whether the acquirer (not the target) is entrenched in order to examine the impact of entrenchment managerial decision making. The results show that HTV firms that are entrenched make acquisitions that generate more shareholder wealth and are more likely to increase corporate innovation, suggesting that ATPs can be beneficial in some firms. Copyright © 2013 John Wiley & Sons, Ltd.     

Nonparametric Bayes inference for concave distribution functions

Bayesian inference for concave distribution functions is investigated. This is made by transforming a mixture of Dirichlet processes on the space of distribution functions to the space of concave distribution functions. We give a method for sampling from the posterior distribution using a Pólya urn scheme in combination with a Markov chain Monte Carlo algorithm. The methods are extended to estimation of concave distribution functions for incompletely observed data.     

More Detail on the Pattern of Returns to Educational Signals

This paper develops a multiperiod model in which workers are matched with jobs according to imperfect educational signals, and their subsequent productivities depend on both their inherent ability and on the quality of the job match. The model outlines a sequential process in which underpaid employees reveal their true productivities and overpaid employees are detected by the firm until every match is perfect. The model produces increasing returns to above median educational signals early in a worker's career—a new feature that earlier models did not capture. Estimates using data from the Current Population Survey are consistent with the theoretical result and are suggestive of a concave time pattern for the returns to educational signals.     

Merger Profitability and Trade Policy

We study the profitability incentives for merger and the endogenous industry structure in a strategic trade policy environment. Merger changes the strategic trade policy equlilibrium. We show that merger can be profitable and welfare enhancing, even though it would not be profitable in a laissez‐faire economy. A key element is a change in the governments’ incentives to give subsidies to their local firms. National merger induces more strategic trade policy, whereas international merger does not.     

BIG data – BIG gains? Understanding the link between big data analytics and innovation

ABSTRACT

This paper analyzes the relationship between firms' use of big data analytics and their innovative performance in terms of product innovations. Since big data technologies provide new data information practices, they create novel decision-making possibilities, which are widely believed to support firms' innovation process. Applying German firm-level data within a knowledge production function framework we find suggestive evidence that big data analytics is a relevant determinant for the likelihood of a firm becoming a product innovator as well as for the market success of product innovations. These results hold for the manufacturing as well as for the service sector but are contingent on firms' investment in IT-specific skills. Overall, the results support the view that big data analytics have the potential to enable innovation.