Licensing a new product with non-linear contracts

Abstract .  This paper looks at a situation where a licensor owns a patent on a technology that allows the production of a new good. The licensor seeks to license its innovation to a set of producers that differ according to their marginal cost of producing an existing good. We show that the licensor is able to obtain the profit a monopolist would achieve by producing the new good. The equilibrium licensing contract specifies both a fixed fee and a royalty scheme based on the production of a licensee.     

On the constitution of audit committee effectiveness

Pressures to perform and be effective are significantly influential within contemporary society, including within the realm of corporate boards of directors and audit committees. This paper adopts a social constructivist approach to better understand the process by which meanings regarding audit committee effectiveness are internally developed and sustained, within the small group of people who attend audit committee meetings. We conducted the investigation through interviews in three large Canadian public corporations listed on the Toronto Stock Exchange.     

The size and development of the shadow economy: An empirical investigation from states of India

Using the state level data from India, this paper investigates the size of the hidden economy in Indian states over the period 1974/75 to 1995/96. Our analysis has shown that after liberalization of the Indian economy in 1991/92, the growth in the size of the hidden economy has decreased on an average. Our results show that the growth in the size of the hidden economy is approximately 4% less in scheduled election years than in all other years. We also demonstrate that the growth is significantly lower in those states where the coalition government is in power. An increased growth of newspapers and the literacy rates translate to cleaner governance, e.g. to fewer amounts of shadow economy activities in the economy.     

The intelligibility of supplier information

This paper describes a study in which the intelligibility of supplier information was investigated from a consumer viewpoint. A sample of 123 randomly selected subjects were given eight automobile brochures and asked to rate the manufacturer information on four automobile characteristics which are highly important to consumers.In order to measure intelligibility one subjective and one objective indicator were chosen. The subjective rating scores indicate considerable differences among the characteristics. As the ratings of a list of intelligibility items demonstrate, a negative scoring was especially due to a lack of explanation of technical terms and furthermore to the fact that in the subjects' view, much of what was said in the brochures could have been left out. The hit rate, which was taken as an objective indicator of intelligibility, shows that on average for all subjects and topics under consideration nearly half of the information actually given in the brochures was not made use of as it could not be identified as relevant.This unduly high amount of wasted information can be reduced only when the suppliers of information become aware of — and take into account — the readers' dissatisfaction with unnecessary information.

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Die Verständlichkeit von Anbieterinformationen

Zusammenfassung Der Erfolg jeder Art von Kommunikation hängt von verschiedenen Faktoren, darunter nicht nur von Inhalt, sondern auch von der Präsentation der ausgesandten Information ab. Der Informationsempfänger kann die an ihn gerichtete Botschaft nur dann entschlüsseln, wenn sie für ihn verständlich abgefaßt ist, umgekehrt muß der Informationssender den Kriterien der Verständlichkeit von vornherein Rechnung tragen, wenn seine Information den gewünschten Zweck überhaupt erreichen soll. Die vorgelegte Studie hat zum Ziel, die Verständlichkeit gegebener Anbieterinformationen aus der Sicht der Konsumenten zu überprüfen und daraus Vorschläge für eine verständlichkeitsfördernde Aufbereitung der Informationen abzuleiten.Im Mittelpunkt des empirischen Vorgehens standen Anbieterinformationen, die in Prospekten enthalten sind. Beispielhaft wurde getestet, ob Herstellerinformationen in Automobilprospekten von den Prospektnutzern herausgefunden und entscheidungsbezogen umgesetzt werden können, und ob diese Informationen von den Konsumenten als verständlich bewertet werden. Im Rahmen einer schriftlichen Befragung wurde 123 zufällig ausgewählten Personen mit Führerschein eine Stichprobe von 8 Automobilprospekten zur Durchsicht nach 4 vorgegebenen Themenbereichen vorgelegt. Bei der Auswertung wurden ein subjektiver und ein objektiver Verständlichkeitsindikator unterschieden.Das subjektive Urteil der Befragten signalisiert erhebliche Unterschiede im Grad der Verständlichkeit der Informationen zwischen den einzelnen Bereichen. Die zusätzliche Bewertung einer Liste von 10 bipolaren Verständlichkeitsmerkmalen zeigte, daß wesentliche Gründe für negative Urteile der Befragten darin liegen, daß einerseits Fachwörter in den Prospekten nicht erklärt, andererseits viel überflüssige Worte gemacht werden. Die Findequote als objektives Maß für Verständlichkeit wies aus, daß im Durchschnitt über alle Befragten und Themenbereiche nahezu 50% der in den Prospekten tatsächlich enthaltenen Informationen von den Befragten nicht herausgefunden werden konnten. Dieses unerwartet hohe Ausmaß an fehlangebotenen, weil nicht genutzten Informationen könnte dann reduziert werden, wenn die Informationsanbieter ihre Botschaften verstärkt anwendungsbezogen, den Kognitionen der Verbraucher entsprechend aufbereiteten und durch Streichung von überflüssigen Zusätzen verdichteten.

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Ingrid Gottschalk and Iris Schneider are Research Associates at the University of Hohenheim, Institute 530, P.O. Box 700562, D-7000 Stuttgart 70, FRG.     

AUDITOR OBJECTIVITY: THE EFFECT OF PRIOR INVOLVEMENT IN AUDIT PROGRAMME DESIGN

This study tests whether the involvement of independent auditors in the design of an audit programme affects their subsequent audit work relating to that audit area. Two groups of subjects played roles in designing partial audit programmes for a particular account. They also evaluated partial audit programmes for another account designed by someone else. A third group merely evaluated partial audit programmes for both accounts. All subjects were informed that both audit programmes were implemented and of potential problems that could be attributed to either of the two accounts. Subjects were asked to allocate 15 hours to investigate either or both of the accounts in question. Our hypothesis was that auditors who had a role in designing a partial audit programme would allocate less audit effort to that account than auditors who had no role in the programme design. Comparisons of the hours allocated provided some support for this hypothesis.