Herding in Chinese stock markets: a nonparametric approach

The paper reports new evidence of herding in the Chinese A-type and B-type markets by employing nonparametric kernel regression. We find statistically significant evidence of herding in A-type market under both extreme high and low market returns. Herding in B-type market, which predominantly consists of foreign investors, indicates only weak evidence of herding. We do not find any statistically significant evidence of herding in the pre-2001 sample of B-type market, when only foreign investors could do the trading. Lack of knowledge and experience of local investors may be attributed to the presence of herd behaviour in the Chinese markets.     

Hayekian complexity and the role of regulation in electricity markets

Utilities worldwide have followed the natural monopoly model for more than a century. This has started to change in recent decades. Electricity systems have become complex, as interactions between participants become multidimensional. This article examines the knowledge problem in an increasingly complex electricity system. I argue that increasing complexity in the electricity system necessitates reconsideration of the regulatory tariff model for utilities.     

Cyclicality of fiscal policy and the shadow economy

A survey of recent literature on cyclical properties of fiscal policy reveals that fiscal policy is procyclical in many developing countries whereas it is countercyclical in developed ones. However, there is no consensus on what drives the difference in this specific cyclical property of fiscal policy. Using cross-section and panel data sets for 78 countries we document that procyclicality of fiscal policy is more pronounced in countries with a larger size of the shadow economy. We also show that policies reducing the size of the shadow economy lead to a less (more) procyclical (countercyclical) fiscal response to shocks.     

Optimal privatization of vertical public utilities

Abstract We examine restructuring, divestiture, and deregulation of a vertically integrated public utility, (e.g., electricity), from a public finance perspective. How an optimal restructuring plan for the utility depends on the cost of public funds and on the X‐efficiency gains from privatization, how the optimal degree of competition in the upstream and downstream segments are connected, and implications of privatization for consumer prices are examined. The higher the cost of public funds, the more likely the post‐privatization price will exceed the regulated public utility price. The greater the X‐efficiency gains from privatization, the more likely the post‐privatization price will fall.     

Sustainable development in small and medium enterprises: The role of entrepreneurial orientation in supply chain management

Organizations are under increased pressure to improve their sustainable performance through the adoption of green supply chain management (GSCM) practices. Small and medium enterprises (SMEs) have lagged behind larger corporations due to a number of factors. Chief among these factors is the lack of resources and capabilities. In this study, we investigate whether entrepreneurial orientation as a distinctive firm-level resource contributes to the successful implementation of GSCM practices within SMEs. We use primary data obtained from 316 manufacturing SMEs and analyze the data by using a fuzzy-set qualitative comparative analysis (fsQCA). Our findings show four equifinal configurations of GSCM practices and the components of entrepreneurial orientation (EO) that lead to high environmental performance. Two practices, “eco-design” and “internal environmental management”, are present in all configurations, with the latter being the single core condition. The components of EO are present in all the configurations. Three distinct configurations lead to the simultaneous achievement of high environmental performance and high economic performance. Some noticeable differences appear in these configurations: “internal environmental management” is no longer a core condition, instead external practices (“green purchasing,” “cooperation with customers including environmental requirements,” and “investment recovery”) and “risk-taking” become core conditions. We exptrapolate our findings into a set of propositions that expand theory on the link between entrepreneurial orientation and sustainable performance. Our study provides insights for managers who seek to infuse entrepreneurial thoughts and actions into their green supply chain initiatives.     

Strategy-proof size improvement: is it possible?*

The number of assigned agents (i.e., size) is an important parameter in object allocations. While size maximality clashes with individual rationality and strategy-proofness, it can still be possible to increase the size over a mechanism while keeping these properties. To pursue this research, we devise a size comparison criterion to investigate the possibility of size increase. A mechanism $\psi$ size-wise dominates another mechanism $\varphi$ if the latter never assigns more agents than the former, and at some problem, $\psi$ assigns more agents than $\varphi$. We obtain arguably mild conditions for a mechanism to not be dominated size-wise by an individually rational and strategy-proof mechanism. Moreover, whenever there are at least as many objects as the total number of agents, we find conditions, different from those previously mentioned, for a mechanism to not be dominated size-wise by an individually rational and group strategy-proof mechanism. These results have implications for deferred-acceptance, top trading cycles, efficiency-adjusted deferred-acceptance, serial dictatorship, and Boston mechanisms.     

Workers’ tenure and firm productivity: New evidence from matched employer-employee panel data

Using rich longitudinal matched employer-employee data on Belgian firms, we explore the impact of workers’ tenure on firm productivity. To do so, we estimate production functions augmented with firm-level measures of tenure. We deal with the endogeneity of standard inputs and tenure, which arises from unobserved firm heterogeneity and reverse causality, by applying a modified version of Ackerberg et al.’s (2015) control function method, which explicitly removes firm fixed effects. Consistently with recent theoretical predictions, our analyses point to positive, but decreasing, returns to tenure. We also find that the impact differs widely across several firm dimensions. Tenure is particularly beneficial for productivity in contexts characterized by a certain degree of routineness and low job complexity. Along the same lines, our findings indicate that tenure exerts stronger positive impacts in industrial and capital-intensive firms, as well as in firms less reliant on ICT-intensive and knowledge-intensive processes.     

Kantian equilibria of a class of Nash bargaining games

We study Kantian equilibria of an $n$-player bargaining game, which is a modified version of the well-known divide-the-dollar game. We first show that the Kantian equilibrium exists under fairly minimal assumptions. Second, if the bankruptcy rule used satisfies equal treatment of equals, and is almost nowhere proportional, then only equal division can prevail in any Kantian equilibrium. On the other hand, we show that an “anything goes” type result emerges only under the proportional rule. Finally, using hybrid bankruptcy rules that we construct in a novel fashion, we can characterize the whole equilibrium set. Our results highlight the interactions between institutions (axiomatic properties of division rules) and agents' equilibrium behavior.