Monitoring Policy and Organizational Forms in Franchised Chains

Franchising is nowadays a prominent way to organize the distribution sector. While previous literature suggests that monitoring issues are a critical determinant of organizational choices, it is rather silent on the optimal monitoring strategy once the organization of the chain is set. In this article, we analyze the monitoring policy of chains with both franchised and company-owned units. We develop a model in which a chain monitors its outlets under asymmetric information on local demands and managers’ efforts. We show that partial monitoring (i.e., when the franchisor monitors only a subset of its outlets) represents an optimal monitoring policy. Second, we identify the units that should be monitored. Finally, we discuss the impact of information technologies and outlet location on monitoring policy and how it may affect the proportion of franchised and company-owned units within the mixed chains.     

Incentives for cost misrepresentation in supply chains

This paper investigates sequential manufacturer–retailer price determination and channel performance under possible misrepresentation by one member of its privately known cost. To the standard double marginalization game, we add a preliminary stage where the manufacturer (alternately the retailer) announces its privately known constant marginal cost. We prove that the manufacturer has no incentive to misrepresent its cost, and we give respective sufficient conditions on the demand function for the retailer to overreport and to underreport costs. Depending on the shape of the demand function, opportunistic behavior by the retailer may lower or raise the manufacturer’s profit and channel performance.     

A macroeconomic perspective on Knowledge Management

This paper provides a theory of the interactions between knowledge codification, firm-level organization structures, information diffusion and the dynamics of technological competition. At the firm level, we focus on incentives to design Knowledge Management policies based on the codification of soft into hard information. At the aggregate level, we discuss the endogenous nature of knowledge spillover and the implications for macroeconomic growth. The model predicts the existence of a bell shaped relationship between knowledge codification and technological competition.     

Environmental performance and equilibrium

Abstract.  In this paper we show why firms' or industries' rankings in terms of environmental performance depend not only on the technology but also on market equilibrium. Between two industries committed to the same environmental constraint, the more eco-efficient is the one with the higher output level. By comparing industries and firms, we show that the rankings are not robust, for they are affected by market outcome. The role of eco-efficiency in firms' profitability in equilibrium is also scrutinized. All this shows that the usual eco-efficiency indicators are inadequate. To tackle this problem, we propose a sound indicator.     

How stock markets react to regulatory sanctions? Evidence from France

Our study of how the stock market reacts to sanction announcements by the French financial regulator from 2004 to 2017 finds that the market reacts negatively when a sanction is announced in the press. Cross-sectional regression models show that the penalties are too low to influence market reactions. Our results suggest that after the financial crisis of 2008, a plethora of news on financial wrongdoings has desensitized markets to announcements of sanctions against large companies.     

The impact of trade union membership on training in Britain

This article investigates the impact of openness and tariff reductions on the technical inventiveness of selected OECD countries. The results suggest that even these simple forms of trade liberalization may, under certain conditions, favour technical inventiveness or creativity, the most advanced form of technological gain. It is therefore likely that other, more directly relevant kinds of liberalization of exchange, will have some positive effects on less extreme forms of acquisition of technical knowledge. The diversity in outcomes across the range of countries surveyed points to the need to specify the conditions under which these dynamic technological gains can be reaped and serve as a rationale for international trade policy.     

MIGRATION AND INSTITUTIONS: EXIT AND VOICE (FROM ABROAD)?

A rapidly growing body of research examines the relationship between migration and institutions. Three strands of studies can be distinguished. Some studies focused on the role of domestic and foreign institutions in the decision to migrate. Others were interested by the impact of migration on institutional reforms in migrants' countries of origin. Recent studies focus on how migrants affect social and informal institutions in the destination countries. This survey puts together these three strands of literature with three purposes. First, we offer a short definition and synthetic typology of institutions, which provide a guide to understand several studies we have critically reviewed. Second, our analysis is presented following the analytic framework exit, voice, and loyalty of Hirschman in order to highlight the brain gain phenomenon for developing countries, from an institutional point of view. Third, we review the limited existing work on the very timely topic, whether migrants are harmful or not to institutions in the host countries.     

Nonparametric Efficiency Analysis under Price Uncertainty: A First-Order Stochastic Dominance Approach

This paper extends the nonparametric approach to efficiency analysis to deal with uncertainty of input-output prices. We generalize the notion of economic efficiency to derive necessary and sufficient first-order stochastic dominance (FSD) efficiency conditions. Interestingly, the FSD conditions include as limiting cases the traditional conditions for economic efficiency and technical efficiency. Furthermore, we propose empirical tests for these FSD conditions, which require minimal assumptions concerning the preferences of the decision-maker and the statistical distribution of the prices. From operational point of view, the FSD conditions can be tested empirically using standard mathematical programming techniques. An empirical application to the Dutch electricity distribution sector illustrates the approach.     

Institutional Determinants of Foreign Direct Investment

In this paper, we contribute to the literature on the determinants of foreign direct investment in developing countries and re‐evaluate the role of the quality of institutions on FDI independently of the general level of development. We implement cross‐section estimations based on a newly available database with unprecedented detail on institutions for a set of 52 countries, as well as panel data estimations based on Fraser Institute's data. Furthermore, we control for the correlation between institutions and GDP per capita and for endogeneity of institutions. Finally, we evaluate whether the similarity of institutions between the host and the origin country raises bilateral FDI. We find that a wide range of institutions, including bureaucracy, corruption, but also information, banking sector and legal institutions, do matter for inward FDI independently of GDP per capita. Interestingly, weak capital concentration and strong employment protection tend to reduce inward FDI. Institutional proximity between the origin and the host country also matters, but we find little impact of institutions in the origin country. These results are encouraging in the sense that efforts towards raising the quality of institutions and making them converge towards those of source countries may help developing countries to receive more FDI, independently of the indirect impact of higher GDP per capita. The orders of magnitude found in the paper are large, meaning that moving from a low level to a high level of institutional quality could have as much impact as suddenly becoming a neighbour of a source country.     

Intersubjective economics, theory of production, and the transformation problem

The intersubjectivist theory of value (surveyed in Levy [1990, 1994a] and Fullbrook [1994c, Section 4]) is founded on Simone de Beauvoir's conception of reciprocal desire and emphasizes the role of conventions and intersubjectivity in market relations. It treats money and markets as social institutions and argues that a money economy is fundamentally different from a real one. The tool of intersubjective economics is to offer a system for analyzing standard economic phenomena from a vantage point outside the equilibrium paradigm. But paradoxically, while the intersubjectivists developed intersubjective analysis of the firm [Eymard-Duvernay, 1989; Levy, 1994b, 1995c; Biencourt et al., 1994], the original intersubjectivist theory of value to which they refer is conceived in an exchange economy. This paper's aim, then, is to explore and discuss points for reducing the lack of a theory of production in intersubjective and measurement economics. The author benefited from the useful thoughts of Richard Arena [1990] as well as from useful discussions and strong encouragements from Edward Fullbrook and Charles M. A. Clark. Finally, the author benefited from the useful discussions of conference participants, especially Manuel Garcia.