Crushed by a rational stampede: Strategic share dumping and shareholder insurrections

In this paper, we develop a dynamic model of institutional share dumping surrounding control events. Institutional investors sometimes dump shares, despite trading losses, in order to manipulate share prices and trigger activism by “relationship” investors. These institutional investors are motivated to trade not only by trading profits but also by a desire to protect the value of their inventory and to disguise the quality of their own information. Relationship investor profit from targeting firms both by improving firm performance and by generating private information.     

The improvement trajectory of PCR DNA replication and ERP software as general purpose technologies: an exploratory study of ‘anchor technologies’

As an effort to peek into the black box of large-scale general purpose technologies (GPTs) like biotechnology and information technology, we develop the concept of ‘anchor technologies’. An anchor technology is a core technology of a large-scale GPT (‘mega-GPT’) that opens a new era in the development and diffusion of the mega-GPT. We trace the historical evolution of two process-based, yet otherwise very different, anchor technologies: enterprise resource planning (ERP) software within the mega-GPT of information technology and polymerase chain reaction (PCR) DNA replication within the mega-GPT of biotechnology. The case studies reveal the utility of ‘productisation’ as an important means of commercialising innovations in anchor technologies; more generally, the interplay between improvement in process-based technologies and in complementary product-based technologies provides insight into how ERP and PCR were able to sustain a path of continued improvement within their respective mega-GPT.     

Inequality and Growth: What Can the Data Say?

This paper describes the correlations between inequality and the growth rates in cross-country data. Using non-parametric methods, we show that the growth rate is an inverted U-shaped function of net changes in inequality: changes in inequality (in any direction) are associated with reduced growth in the next period. The estimated relationship is robust to variations in control variables and estimation methods. This inverted U-curve is consistent with a simple political economy model but it could also reflect the nature of measurement errors, and, in general, efforts to interpret this evidence causally run into difficult identification problems. We show that this non-linearity is sufficient to explain why previous estimates of the relationship between the level of inequality and growth are so different from one another.     

Skating on thin ice: rule changes and team strategies in the NHL

Abstract.  In an effort to stimulate a more exciting and entertaining style of play, the National Hockey Association (NHL) changed the rewards associated with the results of overtime games. Under the new rules, teams tied at the end of regulation both receive a single point, regardless of the outcome in overtime. A team scoring in the sudden-death 5-minute overtime period would earn an additional point. Prior to the rule change in the 1999–2000 season, the team losing in overtime would receive no points while the winning team earned 2 points. This paper presents a theoretical model to explain the effect of the rule change on the strategy of play during both the overtime period and the regulation time game. The results suggest that under the new overtime, format equally powerful teams will play more offensively in overtime resulting in more games decided by a sudden-death goal. The results also suggest that while increasing the likelihood of attacking in overtime, the rule change would have a perverse effect on the style of play during regulation by causing them to play conservatively for the tie. Empirical data confirm the theoretical results. The paper also shows that increasing the rewards to a win in regulation time would prevent teams from playing defensively during regular time.     

Innovation and Productivity Advances in British Agriculture: 1620–1850

Theory, historiography, and empirical evidence suggest that agriculture is the key to economic development. This article examines the extent to which productivity advances in British agriculture during the period 1620–1850 were driven by technological progress. Measuring technology by patents and new book titles on agricultural methods, the results are consistent with endogenous growth theory, indicating that technological progress has played a significant role in agricultural productivity advances.     

Equivalence of utilitarian maximal and weakly maximal programs

For a class of aggregative optimal growth models, which allow for a non-convex and non-differentiable production technology, this paper examines whether the set of utilitarian maximal programs coincides with the set of weakly maximal programs. It identifies a condition, called the Phelps–Koopmans condition, under which the equivalence result holds. An example is provided to demonstrate that the equivalence result is invalid when the Phelps–Koopmans condition does not hold.     

Rent a womb: Surrogate selection,investment incentives and contracting

We develop a model of gestational surrogacy, in which a childless couple faces heterogeneous prospective surrogates. High-type surrogates add more value but also have higher outside options. Surrogates can make specific investments for the overall well-being (care) of the unborn child. We show that, under noncontractibility, surrogates invest less (take less care) than the first-best. Couples are also more likely to choose low-type surrogates, who need less compensation for foregoing cheaper outside options. Hence the popular practice of making surrogacy contracts unenforceable might put the unborn child at risk.