Weather as a Competitive Factor between Local and Foreign Manufacturing Companies in Russia

Globalisation has sparked academic interest in companies’ competitive factors and a myriad of internal and external competitive factors have been studied. However, to our knowledge the weather of the host country has not been under study even though weather has been demonstrated to affect economic activity. This paper utilises a company-level panel data to analyse if weather has an impact on domestic and foreign manufacturing companies’ operations in Russia. Temperature was identified to have a non-linear effect on foreign companies’ revenues, such that a warmer year raises revenues in colder regions while balancing out in warmer regions and actually has a negative effect in the hottest regions. For local Russian companies, we discovered an opposite, but less robust effect. This and home country climate based analysis support the hypothesis that foreign companies benefit from more pleasant weather in the local colder climate while the impact is not so critical for the local companies or foreign companies from countries with similar climate to Russia.     

The Performance Effects of Business Groups in Russia

This study analyses the impact of business group affiliation on firm performance during a time when business groups are newly formed, when the economic and institutional environment is changing, and when group survival is uncertain. Based primarily on a transaction cost approach, we develop two hypotheses, concerning profitability and risk sharing (redistribution) respectively. The positive profitability hypothesis proposes that company affiliation with a business group directly and positively affects the profitability of each affiliate. A positive direct effect emerges when each affiliate benefits from access to group resources. The redistribution hypothesis considers the simultaneous possibility that inter-affiliate transfers of resources through internal markets are designed to redistribute profits among group members. We argue that variance-reducing redistribution from strong to weak group members is linked to group survival in times of institutional change. Our empirical approach focuses on testing these two linked hypotheses (and their alternatives) using a relatively large, contemporary and time varying database of Russian firms. We also develop a framework that distinguishes among the four possible empirical outcomes associated with the hypotheses. Our results provide unambiguous support for the case where the impact of group membership on profitability is positive and redistribution is variance-reducing. We term this outcome Business Group Robustness, and contrast it with other possible empirical outcomes.     

Quantitative analysis of health insurance reform: Separating regulation from redistribution

Two key components of the recent U.S. health reform are a new regulation of the individual health insurance market and an increase in income redistribution in the economy. Which component contributes more to the welfare outcome of the reform? We address this question by constructing a general equilibrium life-cycle model that incorporates both medical expenses and labor income risks. We replicate the key features of the current health insurance system in the U.S. and calibrate the model using the Medical Expenditures Panel Survey dataset. We find that the reform decreases the number of uninsured more than twice and generates substantial welfare gains. These welfare gains mostly come from the redistributive measures embedded in the reform, rather than from the regulatory changes.     

Trade and trade policy with differentiated products: A Chamberlinian – Ricardian model. A comment

Abstract

This paper shows that the results of Venables (1987 Venables, A. 1987. Trade and trade policy with differentiated products: a Chamberlinian – Ricardian model. The Economic Journal, 97: 700–717. [Crossref], [Web of Science ®] , [Google Scholar]) depend critically on the assumption that there are no fixed costs of trade. The introduction of fixed costs of exporting, while making the model more consistent with the empirical evidence, leads to the opposite conclusion that technological progress in one country cannot harm the welfare of its trading partner. However, the results can be obtained in a richer setting with heterogeneous firms.     

Indicative bidding: An experimental analysis

Indicative bidding is a practice commonly used in sales of complex and very expensive assets. Theoretical analysis shows that efficient entry is not guaranteed under indicative bidding, since there is no equilibrium in which more qualified bidders are more likely to be selected for the final sale. Furthermore, there exist alternative bid procedures that, in theory at least, guarantee 100% efficiency and higher revenue for the seller. We employ experiments to compare actual performance between indicative bidding and one of these alternative procedures. The data shows that indicative bidding performs as well as the alternative procedure in terms of entry efficiency, while having other characteristics that favor it over the alternative procedure. Our results provide an explanation for the widespread use of indicative bidding despite the potential problem identified in the equilibrium analysis.     

A dual-process model of how incorporating audio-visual sensory cues in video advertising promotes active attention

Capturing consumers’ attention to video advertising is a key marketing challenge. Using real video advertising viewed by a sample of consumers matching the US population on age and gender, the authors examined attention to audio-visual and visual sensory cues identifying the brand using a biometric measure, phasic heart rate. The findings show differences in attention type depending on which senses are stimulated by the sensory cue. This research uncovers a mechanism (internal processing) for how consumers process multisensory cues (audio-visual) in video advertising and confirms visual sensory cues can elicit automatic attention through the orienting response. In addition to the dual-coding explanation for the superiority of audio-visual sensory cues, the present research suggests a second reason: that audio-visual sensory cues can elicit additional internal processing of the brand name, resulting in active attention and better storage of the brand in memory. This has implications for the limited capacity model of motivated mediated message processing, as well as for marketers relating to the type of content recommended to follow an audio-visual or visual sensory cue in video advertising.     

Modelling driver propensity for traffic accidents: a comparison of multiple regression analysis and fuzzy approach

Abstract

This research proposes an assessment and decision support model to use when a driver should be examined about their propensity for traffic accidents, based on an estimation of the driver’s psychological traits. The proposed model was tested on a sample of 305 drivers. Each participant completed four psychological tests: the Barratt Impulsiveness Scale (BIS-11), the Aggressive Driving Behaviour Questionnaire (ADBQ), the Manchester Driver Attitude Questionnaire (DAQ) and the Questionnaire for Self-assessment of Driving Ability. In addition, participants completed an extensive demographic and driving survey. Various fuzzy inference systems were tested and each was defined using the well-known Wang-Mendel method for rule-base definition based on empirical data. For this purpose, a programming code was designed and utilized. Based on the obtained results, it was determined which combination of the considered psychological tests provides the best prediction of a driver’s propensity for traffic accidents. The best of the considered fuzzy inference systems might be used as a decision support tool in various situations, such as in recruitment procedures for professional drivers. The validity of the proposed fuzzy approach was confirmed as its implementation provided better results than from statistics, in this case multiple regression analysis.     

How Chinese Agricultural Immigrants Affect Farmers in the Russian Far East

China’s international position as a net creditor nation provides it with foreign exchange that it has invested in Asian and African countries. One example is China's investment in the Russian Far East (RFE). Thousands of Chinese agricultural workers have migrated to the RFE in recent decades. They are often welcomed by Russian farmers who face a labor shortage and by local residents who can buy cheap vegetables from them, but there are others who resent their presence in the region as competitors. Our study is the first empirical study of this relationship. Our results demonstrate economic benefits to the Russian households. There are, however, some negative repercussions of Chinese farmers in the RFE, and the governments of both China and Russia need to manage the situation wisely.     

Survival auctions

Dynamic clock auctions with drop-out information typically yield outcomes closer to equilibrium predictions than do comparable sealed-bid auctions. However, clock auctions require congregating bidders for a fixed time interval, which has limited field applicability and introduces inefficiencies of its own given the time cost of congregating bidders. In this experiment we explore the effects of removing these inefficiencies through survival auctions—a multi-round sealed-bid auction which is theoretically isomorphic to the dynamic clock auction with drop-out information. Kagel’s research was partially supported by National Science Foundation Grants No. 0136925 and 0136928. Any opinions, findings, and conclusions or recommendations in this material are those of the authors and do not necessarily reflect the views of the National Science Foundation. We thank the associate editor, an anonymous referee, seminar participants at Purdue University, especially Tim Cason, participants at International Industrial Organization April 2004 Conference, the ESA June 2003 meetings, and our discussant, Tim Salmon, for valuable comments. Kirill Chernomaz provided valuable research assistance. The usual caveat applies.