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.     

Experimental test of airplane boarding methods

We report the results of an experimental comparison of airplane boarding methods. This test was conducted in a mock Boeing 757 fuselage, located on a Southern California soundstage, with 12 rows of six seats and a single aisle. Five methods were tested using 72 passengers of various ages. We found a significant reduction in the boarding times of optimized methods over traditional methods. These improved methods, if properly implemented, offer the potential for significant savings to airline companies.     

Drivers and antecedents of manufacturing offshoring and backshoring—A German perspective

Discussions on the potentials and risks of the relocation of manufacturing activities to low-wage countries have resurged in recent years in the wake of a new globalisation debate. Manufacturing offshoring has become an increasingly interesting option for firms of all sizes. Besides the chances to improve the company's cost position, the risks of production offshoring are also evident. An analysis of the manufacturing offshoring and backshoring activities of 1663 German manufacturing companies shows that production offshoring has currently lost momentum. On the other hand, backshoring of once offshored manufacturing capacities is also a quantifiable phenomenon. Every fourth to sixth offshoring activity is followed by a backshoring activity within the following 4 years, mainly due to lack of flexibility and quality problems at the foreign location. A deeper, qualitative analysis in 39 German manufacturing companies shows that not all companies do pay sufficient attention to qualitative factors crucial for success and competitive advantage in their location decisions. Thus, managerial implications for a systematic location planning process are drawn from our findings.     

Optimal formation rules for patent pools

Patent pools in the framework of Lerner and Tirole (Am Econ Rev 94:691–711, 2004) may enhance or reduce social welfare. This paper presents a pool formation mechanism which prevents welfare decreasing pool equilibria to emerge, and which encourages welfare enhancing pools to form. In order to destabilize welfare decreasing pools, forcing coalitions members to offer individual licenses in parallel to the pool has been suggested. I show that in general, this mechanism is not an efficient antitrust tool. However, the mechanism combined with exclusive pool membership avoids stability problems of welfare enhancing pools, while it creates instability of welfare decreasing pools. I am grateful for comments from the Editor, an anonymous referee, and Georg von Graevenitz.