Local network externalities and market segmentation

This paper models interaction between groups of agents by means of a graph where each node represents a group of agents and an arc represents bilateral interaction. It departs from the standard Katz–Shapiro framework by assuming that network benefits are restricted only amongst groups of linked agents. It shows that even if rival firms engage in Bertrand competition, this form of network externalities permits strong market segmentation in which firms divide up the market and earn positive profits. The analysis also shows that some graphs or network structures do not permit such segmentation, while for others, there are easy to interpret conditions under which market segmentation obtains in equilibrium.     

The Gravity Model Analysis of Bangladesh's Trade: A Panel Data Approach

The article applies generalized gravity models to analyze Bangladesh's bilateral trade pattern using the panel data estimation technique. The results reveal that Bangladesh's trade is positively determined by the size of the economies, per capita gross domestic product differential and openness of the trading countries. Bangladesh's exports are positively determined by its income, partner countries' total import demand and openness, but negatively determined by partner countries' income and domestic inflation. Bangladesh's imports are positively determined by income of trading countries and degree of openness of the partner countries and negatively determined by partner countries' inflation. Transportation costs affect Bangladesh's trade negatively.     

Electoral goals and center-state transfers: A theoretical model and empirical evidence from India

We construct a model of redistributive politics where the central government is opportunistic and uses its discretion to make transfers to state governments on the basis of political considerations. These considerations are the alignment between the incumbent parties at the central and state levels and whether a state is a swing state or not. A testable prediction from the model is that a state that is both swing and aligned with the central government is especially likely to receive higher transfers. We test this prediction using Indian data for 14 states from 1974–75 to 1996–97. We find that a state which is both aligned and swing in the last state election is estimated to receive 16% higher transfers than a state which is unaligned and non-swing.     

Technological upgrading and energy demand scenarios for Indian railways—A system dynamics study

This paper presents a system dynamics model of the Indian railway system and generates probable scenarios of its performance up to the year 2011. The basic structure of the model, the relationships between the interacting variables, and the generic flow diagrams used for developing the model are discussed in detail. In generating the scenarios, probable changes in the railway system and in the national socioeconomic environment in which it works are considered. In particular, introduction of technological innovations in the railways and their impact on railway energy demand are examined in detail.     

Inside the <Emphasis FontCategory="SansSerif">“</Emphasis>black box<Emphasis FontCategory="SansSerif">”</Emphasis> of private in-house meetings

We examine information content and related insider trading around private in-house meetings between corporate insiders and investors and analysts. We use a hand-collected dataset of approximately 17,000 private meeting summary reports of Shenzhen Stock Exchange firms over 2012–2014. We find that these private meetings are informative and corporate insiders conducted over one-half of their stock sales (totaling $8.7 billion) around these meetings. Some insiders time their transactions and earn substantial gains by selling (purchasing) relatively more shares before bad (good) news disclosures while postponing selling (purchasing) when good (bad) news is to be disclosed in the meeting. Finally, we conduct a content analysis of published meeting summary reports and find that the tone in these reports is associated with stock market reactions around (1) private meetings themselves, (2) subsequent public release of private meeting details, (3) subsequent earnings announcements and (4) future stock performance.     

Impact of financial and multinational operations on manager perceptions of dividends

We survey managers of firms listed on the Toronto Stock Exchange about their views on dividends. We find the perceptions of factors that influence dividend policy differ between managers of financial and non-financial firms. Industry classification also affects how managers view statements about the dividend pattern, dividend setting process, dividend policy and firm value, residual dividend theory, and explanations for paying dividends. However, we find weak, if any, multinational operations effect on manager perception of dividends. We conclude that researchers investigating dividends should partition the data by industry type and perhaps other firm characteristics to better understand the dividend puzzle.     

Dynamics of money, output and price interaction — some Indian evidence

The present study is an attempt to model the dynamic interactions between money, output and prices in a structural vector autoregression framework. The primary concern of the paper is to examine the sources of variations and response of one variable to changes in others in a system of economic variables in the Indian context. Using quarterly data from 1970Q1 to 1990Q4, we find that structural factors, in addition to monetary factors, play an important role in generating and sustaining the process of inflation and fluctuations in economic activity. An increase in money/credit supply is found to increase output and prices in the short-run and prices in the long-run, while a non-accommodating monetary policy is ineffective in controlling inflation even at the cost of substantial output losses, thereby indicating relative rigidities in price movements. Another interesting finding is that the monetary authority responds differently to different price shocks, exercising its leverage in altering the quantity as well as the composition of aggregate money supply. Our findings also indicate that the economy is characterized by relatively large and infrequent shocks to ‘price/cost’-related factors. Finally, our analysis suggests that a simple monetary targeting without adequate ‘supply side’ measures may not be able to serve the objective of maintaining growth with price stability.     

Trade liberalization and industrial growth in Pakistan: a cointegration analysis

Using the framework of an endogenous growth model, this study empirically analyses the relationship between trade policies and industrial growth in Pakistan during the period 1973–1995. The cointegration and error correction modelling approaches have been applied. The empirical results suggest that there exists a unique long-run relationship among the aggregate growth function of industrial value added and its major determinants of the real capital stock, the labour force, real exports, the import tariff collection rate and the secondary school enrolment ratio. The short-term dynamic behaviour of Pakistan's growth function of industrial value added has been investigated by estimating an error correction model in which the error correction term has been found to be correctly signed and statistically significant.     

Decentralized capacity management and internal pricing

This paper studies the acquisition and subsequent utilization of production capacity in a multidivisional firm. In a setting where an upstream division provides capacity services for itself and a downstream division, our analysis explores whether the divisions should be structured as investment or profit centers. The choice of responsibility centers is naturally linked to the internal pricing rules for capacity services. As a benchmark, we establish the efficiency of an arrangement in which the upstream division is organized as an investment center, and capacity services to the downstream division are priced at full historical cost. Such responsibility center arrangements may, however, be vulnerable to dynamic hold-up problems whenever the divisional capacity assignments are fungible in the short-run, and therefore, it is essential to let divisional managers negotiate over their actual capacity assignments. The dynamic hold-up problem can be alleviated with more symmetric choice of responsibility centers. The firm can centralize ownership of capacity assets with the provision that both divisions rent capacity on a periodic basis from a central unit. An alternative and more decentralized solution is obtained by a system of bilateral capacity ownership in which both divisions become investment centers.