Strategic Responses to Competitive Pressure: The Case of Township and Village Enterprises in China

This study assesses the configuration between strategic orientation and industrial environment for Chinese township and village enterprises (TVEs), the organizational form which has played an increasingly important role in Chinese economic development and structural reform. We argue that the complexity, dynamism, and hostility of the industrial environment influence TVE managers' perception of competitive pressure, which in turn affects the firm's strategic orientations such as innovativeness, proactiveness, risk-taking, and analysis. Our analysis, based on a survey of TVE managers in Tinjin and Jiangsu, demonstrates that complexity and dynamism of industrial competition have a systematically positive impact on TVE's innovativeness, proactiveness, risk-taking, or analysis. Environmental hostility is not significantly associated with any strategic orientations adopted by Chinese TVEs. Implications of the findings are discussed.     

LOOKING AT THE “POPULATION PROBLEM” THROUGH THE PRISM OF HETEROGENEITY: WELFARE AND POLICY ANALYSES*

Upon introducing heterogeneity and dynamics into a model of the demand for children, a problem of optimal population is defined and analyzed. It is shown that from the perspective of social welfare, better‐educated individuals produce too few children while less‐educated individuals produce too many children and all individuals invest too little in the education of their children. The impact of several policy tools geared at addressing the “population problem” is investigated, in particular how child allowances and other tax‐subsidy policies can be harnessed to enhance welfare, and how and why early childhood education programs can mitigate the “population problem.”     

On a Variation in the Economic Performance of Migrants by their Home Country’s Wage

Although the economic performance of migrants in the receiving country undoubtedly depends on qualifications, it is also affected by inclinations. Given the probability of return migration, a behavioural link is established between the incentive of migrants to save in their country of destination and the prevailing wage rate in their home country. It is shown that migrants coming from a low‐wage country optimally save more than migrants from a high‐wage country. Policy and research implications suggested by this savings behaviour are alluded to.     

The dynamics of price elasticity of demand in the presence of reference price effects

The authors derive an expression for the price elasticity of demand in the presence of reference price effects that includes a component resulting from the presence of gains and losses in consumer evaluations. The effect of reference price is most noticeable immediately after a price change, before consumers have had time to adjust their reference price. As a result, immediate-term price elasticity is higher than long-term elasticity, which describes the response of demand long after a price change, when reference price effects are negligible. Furthermore, because of the differential effect of gains and losses, immediate-term price elasticity for price increases and price decreases is not equal. The authors provide a quantitative definition for the terms immediate term and long term, using the average interpurchase time and the discrete “memory” parameter. Practical consequences of the distinction between immediate- and long-term elasticities for the estimation and use of elasticity values are discussed. Gadi Fibich (fibich@math.tau.ac.il) is an associate professor in the Department of Applied Mathematics at Tel Aviv University. This research grew out of his interest in applications of mathematical modeling to economics and management science. He is currently working on auction theory. Arieh Gavious (ariehg@bgumail.bgu.ac.il) is a senior lecturer in the Department of Industrial Engineering at Ben Gurion University, Israel. His interest is in application of game theory to economics and management science problems. His current interest is in auction theory. Oded Lowengart (odedl@bgumail.bgu.ac.il) is a senior lecturer in the Department of Business Administration at Ben Gurion University, Israel. His research interests are in the areas of modeling pricing effects on consumer behavior at both aggregate and disaggregate levels, product positioning, and market share forecasting and diagnostics.     

Stock repurchases: How firms choose between a self tender offer and an open-market program

In practice, open-market stock repurchase programs outnumber self tender offers by approximately 10–1. This evidence is puzzling given that tender offers are more efficient in disbursing free cash and in signaling undervaluation – the two main motivations suggested in the literature for repurchasing shares. We provide a theoretical model to explore this puzzle. In the model, tender offers disburse free cash quickly but induce information asymmetry and hence require a price premium. Open-market programs disburse free cash slowly, and hence do not require a price premium, but because they are slow, result in partial free cash waste. The model predicts that the likelihood that a tender offer will be chosen over an open-market program increases with the agency costs of free cash and decreases with uncertainty (risk), information asymmetry, ownership concentration, and liquidity. These predictions are generally consistent with the empirical evidence.     

Research on rural-to-urban migration in LDCs: The confusion frontier and why we should pause to rethink afresh

Over 12 years of intensive research in the field of rural-to-urban migration have left the field beset with loss of direction and some serious doubts as to: (1) whether research has really provided practitioners with more specific means of intervention; (2) proper understanding of such intervention, its justification and results; (3) the areas in which the marginal benefit of extra research amounts to zero; (4) those areas in which some consensus has emerged; (5) which problem areas and specific issues merit intensive migration research in the coming years; and (6) whether or not the academic profession has based its migration research effort in the past decade on an inappropriate set of presuppositions or, even worse, on invalid postulates. A few examples of confusion and/or fallacies that render this list more concrete are presented in this paper. These are drawn from the areas of migration and fertility; migration and education; migration and the distribution of income by size; migration and urban unemployment; migration and the politics of economics; migration and policy measures.This paper, then, makes a plea for a major re-evaluation which could and should provide a turning point in academic work and institutional thought. The emphasis is on reformulation of the policy-related presumptions on which research has been based for the past dozen years. Rather than trying to reach a better understanding of the decision-making process generating rural-to-urban migration and its sectoral and overall social implications so as to devise more effective measures to contain/reverse it, the starting point should be an effort to effectively manipulate the phenomenon so as to turn it into a vehicle of national development and personal betterment.     

Sequential facility location with distance dependent demand

Systems providing identical service to many population centers frequently face the issue of where to locate the next retail outlet, branch, store, etc. In such systems the demand for the facilities' service depends mainly on the distance between facilities and customers. It is assumed that there are already m facilities located on a network to respond to the demand at the nodes. The paper addresses the problems of finding a location on the network for the (m +1 )st facility corresponding to a given total expected demand and of determining which demand points will be served by which facility. Also the range of the total expected demand values that can be realized along each link in the m +1 facility system is determined. Examples and a discussion of the results are provided.     

Clubs in an urban setting

In this paper the properties of a congestable concentrated local public good (CCoLPG) are described, taking into account both locational aspects and congestion. This discussion, therefore, completes the analysis of congestable local public goods (LPG) which was started in our earlier paper (Congestable local public goods in an urban setting, J. Urban Econ., 290–310 (1982). It is here shown that the optimal provision of CCoLPG leads to the creation of clubs, where the government has to determine the location and provide the optimal quantity of LPG in each club and also levy congestion tolls on users according to their level of utilization of the club. Congestion tolls cover the αest part of the costs, where α is the level of congestability of the CCoLPG. The rest of the costs are covered by taxing land rents. Clubs will form, possibly more than one per city, even if the LPG is pure (i.e., α = 0) and they will contain a single household if the LPG is private (i.e., α = 1). The difference between these results and those of classical club theorists stem from the fact that here we also take into account the limited supply of land of given accessibility (i.e., locational aspects), which like congestion lead to the creation of clubs. When these two factors are considered together, it explains why congestion tolls alone are not sufficient to finance clubs' operations, or why pure LPGs also have to be provided locally, etc.     

Integration, social distress, and policy formation

I study the integration of regions in the form of a merger of populations, which I interpret as a revision of people’s social space and their comparison set; I illustrate the way in which a merger can aggravate social distress; and I consider policy responses. Specifically, I view the merger of populations as a merger of income vectors; I measure social distress by aggregate relative deprivation; I demonstrate that a merger increases aggregate relative deprivation; and I show that a social planner is able to reverse this increase by means of least-cost, post-merger increases in individual incomes, but is unable to counter it by relying exclusively on a self-contained income redistribution that retains individual levels of wellbeing at their pre-merger levels.