Insurance Market Effects of Risk Management Metrics

We extend the classical analysis on optimal insurance design to the case when the insurer implements regulatory requirements (Value-at-Risk). Presumably, regulators impose some risk management requirement such as VaR to reduce the insurers’ insolvency risk, as well as to improve the insurance market stability. We show that VaR requirements may better protect the insured and improve economic efficiency, but have stringent negative effects on the insurance market. Our analysis reveals that the insured are better protected in the event of greater loss irrespective of the optimal design from either the insured or the insurer perspective. However, in the presence of the VaR requirement on the insurer, the insurer's insolvency risk might be increased and there are moral hazard issues in the insurance market because the optimal contract is discontinuous.     

First‐price auctions with resale and with outcomes robust to bid disclosure

Although there exists a pure separating equilibrium of the two‐bidder first‐price auction with resale when the bids are kept secret, the ratchet effect prevents the existence of such an equilibrium if the bidders are heterogeneous and the bids are fully disclosed. Nevertheless, we construct a behavioral equilibrium under full disclosure that is equivalent to the pure separating equilibrium under no disclosure. Thus, if the bidders follow this equilibrium, the choice of the disclosure regime does not affect the final allocation of the item nor the expected payoffs.     

Dynamic monopoly pricing with network externalities

In this paper, we study the optimal dynamic monopoly pricing for a good which exhibits positive network externalities. When network externalities are of sufficient magnitude, we show that, contrary to the Coase theorem, (1) there is no time inconsistency problem; (2) subgame perfect equilibrium prices increase as time passes. From this point of view, positive network externalities allow the monopoly to commit itself credibly to increasing future prices.Ce papier étudie la tarification optimale intertemporelle d'un monopole qui vend un bien exhibant des externalités positives de réseau. Lorsque ces externalités sont suffisamment importantes, nous montrons que, contrairement au théorème de Coase, (1) il n'y a pas de problème d'incohérence temporelle, (2) les prix d'équilibre parfait croissent avec le temps. De ce point de vue, les externalités positives de réseau permettent au monopole de s'engager crédiblement sur une politique de prix futurs à la hausse.     

Asymmetric performance: the market share impact of scale and link alliances in the global auto industry

This study investigates how participating in strategic alliances with rivals affects the relative competitive positions of the partner firms. The paper builds on studies that show significant differences in the outcomes of scale and link alliances. The study argues that the more asymmetric outcomes of link alliances translate into greater changes in the relative market shares of the partner firms, due to unbalanced opportunities for inter‐partner learning and learning by doing. We find support for this argument by examining 135 alliances among competing firms in the global automobile industry, from 1966 to 1995. Copyright © 2004 John Wiley & Sons, Ltd.     

Ambiguity and the process of knowledge transfer in strategic alliances

This research examines the role played by the ‘causally ambiguous’ nature of knowledge in the process of knowledge transfer between strategic alliance partners. Based on a cross‐sectional sample of 147 multinationals and a structural equation methodology, this study empirically investigates the simultaneous effects of knowledge ambiguity and its antecedents—tacitness, asset specificity, prior experience, complexity, partner protectiveness, cultural distance, and organizational distance—on technological knowledge transfer. In contrast to past research that generally assumed a direct relation between these explanatory variables and transfer outcomes, this study’s findings highlight the critical role played by knowledge ambiguity as a full mediator of tacitness, prior experience, complexity, cultural distance, and organizational distance on knowledge transfer. These significant effects are further found to be moderated by the firm’s level of collaborative know‐how, its learning capacity, and the duration of the alliance. Copyright © 1999 John Wiley & Sons, Ltd.     

Using International Institutions to Improve Public Procurement

The World Trade Organization's voluntary rules on governmentprocurement are a useful mechanism for ensuring that publicprocurement procedures are efficient. They also provide an opportunityto reduce the uncertainty of participants by increasing transparencyand accountability. Yet most developing countries have chosennot to subject their procurement policies to international disciiplinesand multilateral surveillance. Their reasons may include anunfamiliarity with the government procurement agreement (GPA);a perception that the potential payoffs are small; a desireto discriminate in favor of domestic firms; or the successfulopposition of groups that benefit from the current regimes.Although the economic rationales for abstaining from the GPAare not compelling, a quid pro quo for accession may be neededto overcome opposition by special interests. Developing countryprocurement markets are large enough that governments may beable to make accession to the GPA conditional on temporary exceptionsto multilateral disczplines or on better access to export markets.