A spatial merger estimator with an application to school district consolidation

This paper develops a spatial merger estimator to explain political integration generally and then applies this method to a wave of school district mergers in the state of Iowa during the 1990s. Our estimator is rooted in the economics of matching and thus accounts for three important features of typical merger protocol: two-sided decision making, multiple potential partners, and spatial interdependence. Rather than simply explaining when a particular region is likely to experience a wave of political integration, our method allows us to explore the factors driving which specific subregional mergers take place. This allows us to explore how those districts that merge choose with which of their neighbors to do so. Our results highlight the importance of state financial incentives for consolidation, economies of scale, diseconomies of scale, and a variety of heterogeneity measures in this particular application. We also demonstrate the power of our estimator, relative to existing estimators, to detect a statistically significant role for heterogeneity factors. While our application is limited to school district consolidation, our method can be adapted to include the salient features of many spatial integration problems.     

Pay-performance sensitivity and firm size: Insights from the mutual fund industry

I examine the ex ante decision to make an agent's pay-performance sensitivity an inverse function of organization size. I focus on mutual funds and their decision to use compensation contracts that reduce the advisor's marginal compensation as the fund grows (a declining-rate contract) over the dominant contract type, where marginal compensation is unrelated to fund size (a single-rate contract). I find evidence consistent with the view that declining-rate contracts are a mechanism to keep marginal compensation in line with the advisor's declining marginal product. Specifically, I find that funds with greater exposure to diseconomies of scale are more likely to use a declining-rate contract and to specify a greater amount of compensation decline in their contracts. Consistent with optimal contracting, I find no evidence of a performance difference between funds with declining-rate contracts and funds with single-rate contracts.     

Strategies for sales force management

Far too few companies with a personal selling force utilize a scientific framework to aid in solving their tactical selling problems. While this approach is used somewhat in other functional areas of the business, personal selling is by-passed. The purpose of this article is to investigate the major decision-making areas a sales manager must act upon and to provide tools to enable him to make rational decisions through the framework of models. Hopefully, the following models will provide the sales manager with more effectiveness in 1) dealing with sales force problems, and 2) attainment of the company's sales objectives. At the very least, exposure to this framework will motivate the sales manager and salesmen to think of the various factors and their functional relationship as they affect the selling effort of the company.     

Distinguishing market segments to assess price responsiveness

Economists and marketers have developed theoretical constructs which suggest that effective market segmentation can be used to identify differences in price sensitivity among market theory in the industrial marketing literature by using marketing research to distinguish market segments that are useful in industrial pricing decisions. Both macrosegmentation, using characteristics of customers (that is, end-use and usage level), as well as microsegmentation (using behavioral variables) were utilized in a survey of natural gas customers to determine if segments of the industrial market differ in price sensitivity.     

Furthering the integration of marketing and logistics through customer service in the channel

Recent emphasis on customer service in both the academic and trade literature reveals a growing but confusing body of knowledge. Both the marketing and logistics disciplines have offered varying definitions of customer service, but have failed to offer a comprehensive framework which represents customer service and its related marketing and logistics issues. This article offers the viewpoint that customer service is a conceptual unifying factor for integrating marketing and logistics. The channel system is introduced as the vehicle by which buyer/seller relationships must be analyzed to understand formation of buyer expectations, interaction of marketing and logistics activities, and subsequent customer service performance. The institutional, behavioral, and physical dimensions of channel activity influence many of the marketing and logistics decisions made by management. The framework offered in this article differs from previous efforts in that customer service is the output of the unified activities of marketing and logistics. It considers marketing and logistics decisions jointly, re-evaluates and expands the production function in logistics, and ties customer service to customer satisfaction or dissatisfaction.     

Toward global checks and balances

The rapid growth and importance of intergovernmental coordination in the regulation of markets, transportation and communication, the environment, and national security poses numerous challenges for democratic accountability within participating states. Direct public participation in the intergovernmental regulatory bodies is generally modest or absent. Information regarding their deliberations is limited. And the multiple oversight mechanisms and supervisory processes that exist at the domestic level of developed democracies that can scrutinize intergovernmental regulatory decisions tend to be lacking. This lack of accountability raises legitimacy concerns, the most prominent of which is the fear executive branch officials will delegate controversial policy decisions to intergovernmental bodies in order to escape democratic deliberation. In this paper we survey the ways that different review venues (other international institutions and national courts) are attempting to cope with these accountability related issues: we argue that national courts may prove to be the most effective venue for promoting democratic accountability. This is not because they are more reliably representative of their domestic constituency or possess a more cosmopolitan perspective than the bodies whose decisions they are reviewing. Rather their relative advantage lies in: (1) the increasing acceptance on the part of domestic courts that inter-judicial coordination is a prerequisite for their continued ability to fulfill their judicial review function; and (2) the visibility that the decisions of these courts possess. Acting together these two forces have the potential to foster greater transparency and public deliberation than most rival venues.     

An Analysis of Differences in Earnings Between Small and Large Commercial Banks

This paper introduces a simple, yet rich, measure of efficiency changes based on the revenue-generating-ability (RGA) principle. Using this principle, we explain the connections between efficiency changes and the variables, such as pretax profits, interest expense, non-interest expense, profit margins, loan loss provision, and asset quality. These connections are used to explain earnings differences between small and large commercial banks.     

Exponent of Cross‐Sectional Dependence: Estimation and Inference

This paper provides a characterisation of the degree of cross‐sectional dependence in a two dimensional array, {x_it,i = 1,2,...N;t = 1,2,...,T} in terms of the rate at which the variance of the cross‐sectional average of the observed data varies with N. Under certain conditions this is equivalent to the rate at which the largest eigenvalue of the covariance matrix of x _t=(x_1t,x_2t,...,x_Nt)′ rises with N. We represent the degree of cross‐sectional dependence by α, which we refer to as the ‘exponent of cross‐sectional dependence’, and define it by the standard deviation, , where is a simple cross‐sectional average of x_it. We propose bias corrected estimators, derive their asymptotic properties for α > 1/2 and consider a number of extensions. We include a detailed Monte Carlo simulation study supporting the theoretical results. We also provide a number of empirical applications investigating the degree of inter‐linkages of real and financial variables in the global economy. Copyright © 2015 John Wiley & Sons, Ltd.     

Combining choice modelling and multi-criteria analysis for technology diffusion: An application to the uptake of electric vehicles

Efforts to reduce greenhouse gas emissions in the residential sector by adopting technologies such as solar photovoltaics and electric vehicles (EVs) have major implications for the capacity of electricity distribution networks, particularly at local areas with high uptake. Consumer decisions to purchase these technologies are also influenced by several complex criteria such as costs/benefits, performance, appeal/status, risk, psychographics, and demographics. This complexity motivated the development of an innovative diffusion model, incorporating features of multi-criteria analysis and choice modelling, to estimate the adoption of these technology options spatially across the landscape of heterogeneous consumers. We test the model to forecast market share of EVs through to 2030, using the vehicle stock across all 1.5 million households in Victoria, Australia. Seven financial and non-financial criteria were included and calibrated via focus groups and a large‐scale survey. Annual change of criteria values and their elasticity to adoption were incorporated. Geographical differences in uptake of EVs were primarily due to driving distance, employment status and household income, with urban areas having about three times the proportional uptake. By testing the model for a range of incentives, we demonstrate its capability to inform and evaluate policy options.     

Concepts and Indicators of Local Authority Performance: An Evaluation of the Statutory Frameworks in England and Wales

A conceptual framework for evaluating statutory performance indicators for local authorities is developed. The framework, which contains 14 dimensions of organizational performance, is then applied to the indicators set for local government from 1993/94 to 2001/02. The results show that the validity and comparability of the indicators has improved substantially over time. However, a critical weakness that remains is the absence of indicators that link spending with service outcomes. Such indicators are essential if judgements about value for money and Best Value are to be made.