Deregulation and differentiation: Incumbent investment in green technologies

Integrating elements from industrial organization economics and the resource‐based view—coupled with path dependence as firm resources evolve over time, this paper suggests that deregulation may not always provide greater opportunities for incumbents, and the extent to which incumbents differentiate on the green dimension may be constrained by their prior resources, in particular, capabilities with respect to brown technologies and experiences with green technologies. Using data on U.S. investor‐owned electric utilities from 1992 to 2008, this paper finds that deregulation is associated with lower entry into the renewable generation market by incumbents compared to regulation. More capable firms using brown technologies, for example, coal‐based generation, are less likely to enter the renewable generation market. Also, incumbents are responsive to actual, not latent, demand for renewable energy. Copyright © 2013 John Wiley & Sons, Ltd.     

International business complexity and the internationalization of languages

While the impacts of culture on international trade and foreign direct investment (FDI) have been much discussed, the influence of languages has been underappreciated in international business. We address this paucity by integrating literature from international economics, international business, Chinese business history, and linguistics to examine the transaction costs of languages. While we recognize that languages represent both a tool in international economic transactions and a vehicle to transmit cultural values, our results point out that this tool is employed differently in international trade and in FDI. Communication costs for both FDI and international trade show a hierarchy, with English the most inexpensive among major trade languages; however, we find that communication costs are much more important in FDI than in international trade. Herein, we offer practical suggestions corporations may implement regarding the matter.     

How Information Quality of Macro Aggregates Affects Sovereign Risk: An Empirical Investigation

This paper looks at the relationship between data quality of macro aggregates and the repayment ratio for debt payments due in a given year after a country defaults. We find empirical evidence that good information of macro aggregates reduces sovereign risk by enhancing the repayment ratio conditional on default, while having an insignificant effect on the default probability. The estimation accounts for selection bias by using a cross-country panel data of 69 developing countries for 1989–2002. Careful consideration is taken to establish information quality of macro aggregates as an exogenous institutional variable. Results are robust to controlling for various governance factors, income levels, and regional factors, etc. Linking information quality to creditors' bargaining power is more consistent with our findings than linking poor information quality to information asymmetry.     

A metafrontier approach for measuring Malmquist productivity index

This paper presents an alternative framework for the decomposition of the Malmquist productivity index by using the concept of a metafrontier. The approach employed allows the calculation of technical efficiency changes, as well as technical changes, for economic agents operating under different technologies. It also enables the computation of the technological gap and its changes for economic agents operating under different technologies. This framework is applied to the analysis of panel data on 58 countries over a period of 31 years from 1970 to 2000. The empirical results show that Asian countries have attempted to move towards the frontier technology and that European countries have taken the lead in the world frontier technology.     

The Baumol Diseases and the Korean Economy

ABSTRACT

This article examines the Baumol effect and the consequences of unbalanced growth across Korean industries. The results demonstrate that the Baumol effect exists, but it is qualitatively different from existing literature. Although Baumol’s cost disease is significant, it is weak. Certain attributes of the Korean economy such as heavy reliance on exports and compressed growth seem to be responsible. Weak cost disease leads to a weak growth disease: the aggregate productivity growth does not monotonically decline over time. Productivity growth has led to the deindustrialization of employment. The value holds effective after controlling the growth of international trade.     

EVALUATING SUPPLY-SIDE AND DEMAND-SIDE SHOCKS FOR FISHERIES: A COMPUTABLE GENERAL EQUILIBRIUM (CGE) MODEL FOR ALASKA

This study used computable general equilibrium (CGE) models to investigate the economic effects of three exogenous shocks to Alaska fisheries: (1) reduction in pollock allowable catch (TAC); (2) increase in fuel price; and (3) reduction in demand for seafood. Two different model versions, ‘Keynesian’ and ‘neoclassical’, were used to estimate impacts on endogenous output, employment, value added, and household income. By using a CGE model, this study overcomes the limitations of fixed-price models (such as input–output models) including (1) inability to calculate welfare effects due to fixed prices; and (2) difficulty of addressing supply-side shocks. There are currently few examples of CGE studies addressing fisheries issues appearing in the literature. Among those, this study is unique in that it uses a relatively disaggregated sector scheme and examines both supply-side and demand-side shocks.