Cutting out the middle-man: The case for direct business involvement in environmental justice

In recent years, environmental concerns have become the first priority for socially-conscious corporations. This article describes the history of the environmental justice movement and its philosophical differences with the mainstream environmental movement. Environmental justice activists allege that the mainstream environmental movement marginalizes the environmental interests of the poor and people of color. Herein, we provide guidance for environmentally-conscious corporations that wish to avoid repeating the same ethical errors.     

MARKET POWER,BANK MEGAMERGERS,AND THE WELFARE OF BANK BORROWERS

We assess the effects on the welfare of corporate borrowers of the recent wave of bank consolidations in the United States that has produced a small number of very large banks. Our evidence from a sample of more than 3,000 commercial borrowers from banks involved in large mergers indicates that the wealth effects on these borrowers are highly negative, statistically significant, and economically important. These negative investor perceptions seem to be driven largely by the expectation of changes in banks’ market power resulting from the mergers.     

Multilateral trade negotiations, bilateral opportunism and the rules of GATT/WTO

Trade negotiations occur through time and between the governments of many countries. An important issue is thus whether the value of concessions that a government wins in a current negotiation may be eroded in a future bilateral negotiation to which it is not party. We identify rules of negotiation that serve to protect the welfare of governments that are not participating in the bilateral negotiation. Our main finding is that the two central principles of GATT/WTO—nondiscrimination (MFN) and reciprocity—preserve the welfare of nonparticipating governments and therefore offer a “first-line of defense” against bilateral opportunism.     

Auctioning countermeasures in the WTO

We offer a first formal analysis of auctioning retaliation rights within the WTO. We show that the auctions exhibit externalities among bidders, and we characterize equilibrium bidder behavior under alternative auction formats. If the violating country is prevented from bidding to retire the right of retaliation against it, then the possibility of “auction failure” arises, whereby no bids are made despite positive valuation by bidders. If the violating country is instead permitted to bid, then auction failure is precluded, and indeed the right of retaliation is always retired. We evaluate these different auction formats from normative (revenue, compliance, efficiency) standpoints.     

An empirical test of the rent-shifting hypothesis: the case of state trading enterprises

A central result in the theoretical literature on strategic trade is the ‘rent-shifting hypothesis’, the idea that government’s can employ trade policy as a precommitment device to transfer profit from foreign to domestic firms. To our knowledge, however, the rent-shifting hypothesis remains untested empirically. This paper constructs a theory-based empirical test of rent-shifting behavior that relies on observations of government precommitment variables employed through State Trading Enterprises (STEs). The analysis applies data on the delayed producer payment structure of the Canadian Wheat Board (CWB) and examines its merits as a rent-shifting mechanism in the international durum market. The model fails to reject the hypothesis that the CWB utilizes a pre-commitment mechanism in the international durum market and several nonparametric tests confirm that the observed transfer payments set by the CWB are consistent with rent-shifting behavior in the 1972-95 pre-WTO period.     

PROFIT SHIFTING AND TRADE AGREEMENTS IN IMPERFECTLY COMPETITIVE MARKETS*

Do new rationales for trade agreements arise once imperfectly competitive markets are allowed? We consider several trade models that feature imperfectly competitive markets and argue that the basic rationale for a trade agreement is, in fact, the same rationale that arises in perfectly competitive markets. In all of the models that we consider, and whether or not governments have political–economic objectives, the only rationale for a trade agreement is to remedy the inefficient terms‐of‐trade‐driven restrictions in trade volume. We also show that the principles of reciprocity and nondiscrimination continue to be efficiency enhancing in these settings.     

Personalization without Interrogation: Towards more Effective Interactions between Consumers and Feature-Based Recommendation Agents

Software agents that provide consumers with personalized product recommendations based on individual-level feature-based preference models have been shown to facilitate better consumption choices while dramatically reducing the effort required to make these choices. This article examines why, despite their usefulness, such tools have not yet been widely adopted in the marketplace. We argue that the primary reason for this is that the usability of recommendation systems has been largely neglected – both in academic research and in practice – and we outline a roadmap for future research that might lead to recommendation agents that are more readily adopted by consumers.     

Signalling and entry deterrence: a multidimensional analysis

I consider whether a privately informed incumbent can use limit pricing and upward distortions in advertising to deter profitable entry. Profitable entry is not deterred when the incumbent is privately informed only about its cost type. Profitable entry may be deterred, however, if the incumbent is privately informed about its cost type and its patience level. An equilibrium foundation is thus provided for the traditional hypothesis that limit pricing and aggressive advertising by an incumbent may deter profitable entry. At a methodological level, the article contributes by characterizing the refined equilibria of a signalling model with multiple dimensions of private information and multiple signals.