Adaptive resilience and the competition between retail and service agglomeration formats: an international perspective

This paper investigates the competitive relationship between dominant urban agglomeration formats (traditional ‘evolved’ town centres and ‘created’ shopping malls) and the drivers of competiveness in the form of key agglomeration resources (accessibility, parking condition, tenant mix, atmosphere). Based on a consumer survey (n, 2,161) across three distinctive European capital cities, covariance-based structural equation modelling reveals remarkably limited differences between formats in terms of the investigated drivers of competitiveness. Positive relationships of patronage towards both formats in all cities and the significant difference in why respondents patronise them suggest a partly complementary existence of the two types of agglomeration. We explain this apparent complementarity through the theory of adaptive resilience that has seen evolved agglomeration formats develop to provide a differentiated offer and consumer attraction compared with enclosed malls.     

Laffont and Tirole's Competition in Telecommunications : A View From the US

This article briefly reviews Competition in Telecommunications by Laffont andTirole (2000); it presents the major conclusions of the book and corrects certain errors. In addition, this article treats related topics, some specific to the US telecommunications industry. In US telecommunications access to incumbents facilities are priced based on cost model estimates. Several of the important sources of misunderstandings of telecommunications costs and cost estimates are described including: multiple meanings of 'access,'meanings of cross-subsidy; nature of loop costs; the many dimensions of marginal costs in telecommunications, misuses of long-run cost concepts; and misuses of 'most efficient' provider assumptions. The methods of cost calculations and legal and regulatory requirements in the US are described, as are the implications for incentive regulation, changing technology, efficient pricing, and measures of efficient competitive entry.     

The Investment in Housing As a Forward Market Transaction: Implications for Tenure Choice and Portfolio Selection

A model of tenure choice is presented which treats the benefits and costs of homeownership from a theory of finance perspective. The incremental benefits from homeownership over renting housing services are from two sources: protection against rental price risk (a forward transaction in the housing market) and from a possible capital gain from the eventual sale of a house (substitutes for portfolio investment). The cost of these benefits is higher initial outlay on housing, which reduces the funds available for portfolio investments. The comparative statics of this model is presented. It is shown that rental risk and portfolio risk add to the value of homeownership. Since homeownership is a partial substitute for portfolio investment, it is shown that the lower the covariance between portfolio returns and future home prices the more valuable is homeownership. In the presence of differential borrowing opportunities it is shown that the leverage available to housing significantly increases the value of homeownership.     

Labour standards and capacity in global subcontracting chains: evidence from a construction MNC

This article investigates how fundamental labour rights specified in international framework agreements are implemented and monitored in subcontracting chains. It shows how labour's capacity for workplace‐based monitoring is influenced by factors such as ownership structures, the societal context, and, most importantly, the institutions and dynamics of local labour control.     

EXPERIMENTAL EVIDENCE OF A SUNK‐COST PARADOX: A STUDY OF PRICING BEHAVIOR IN BERTRAND–EDGEWORTH DUOPOLY*

We experimentally test the effect of sunk costs on decision making. In the experiment, subjects play the role of price‐setting duopolists. Both firms have identical costs, including an exogenous sunk cost that varies across sessions over six different values. We observe that the sunk cost has a U‐shaped effect: From low to medium levels, average prices decrease, but from medium to high levels, average prices increase. This effect, which is consistent with loss avoidance, develops quickly and persists throughout the game. A follow‐up experiment confirms the main results of the original experiment.     

Determinants of moral hazard in research and development supply relations: Empirical results beyond the agency‐theory explanation

Moral hazard can hinder both the realization and the effectiveness of research and development (R&D) supply relations. However, to the best of our knowledge, there have been no empirical studies investigating the determinants of moral hazard under the specific circumstances of R&D supply relations. Based on a study on 104 cases, this article will help to fill that gap. The results not only confirm information asymmetries as determinants, as predicted by principal‐agent theory, but also reveal surprising effects of additional factors. Thus, we show that the general explanation of moral hazard needs to be adapted to the specifics of a concrete exchange situation.     

Columbia Law School Roundtable on The Future Of Capitalism

In this discussion that took place at Columbia Law School's Millstein Center last October (and thus well before the appearance of the coronavirus), two distinguished English academics, a Pulitzer Prize‐winning journalist, and the executive chairman of a large American investment house discussed the role of corporations in addressing the crises that periodically beset the capitalist system. Sir Paul Collier opened with the comment that, although capitalism had shown itself to be the only effective system for mass human improvement in the past 10,000 years, it was now experiencing its “third serious derailment.” In each of the first two—the first in Northern England in the 1840s and the second during the Great Depression of the 1930s—capitalism was preserved in significant part by the “moral load‐bearing” performed by private companies and citizens. For capitalism to survive this third derailment, the public and private sectors must join forces to address what Collier to sees as the most formidable economic challenge: finding ways to transport urban jobs and capabilities to rural areas still reeling from two major blows—the first, a century ago to agriculture, and the second, for the past two or three decades, to large‐scale manufacturing. Collier's Oxford colleague Colin Mayer follows by calling on public companies to formulate and state a corporate social purpose that goes beyond maximizing their own long‐run shareholder values. And to encourage and support such a practice, Mayer urges the large universal owners that own large stakes in all the world's large listed companies not only to support and applaud such statements, but to find ways to ensure that companies are living up to them. Alan Schwartz, Executive Chairman of Guggenheim Partners, responds by noting that capitalism has been forced to make major adjustments throughout its history. And consistent with Collier's observations, Schwartz argues that the global economic order should have been preparing for the past 30 or 40 years for its biggest challenge: creating a global economy dynamic enough to provide jobs for some two or three billion new unskilled workers spawned by the globalization of the world economy. The American private sector, after having lost much of its efficiency and value in the 1970s, has since used continuous restructuring to produce enormous productivity gains and value. And although generally supportive of the thinking behind the Business Roundtable's recent statement, Schwartz deplores the confusion that continues to surround the message. Those corporate leaders now endorsing the pursuit of social goals are by no means asking their shareholders to accept below‐market returns on investment. In well‐run companies focused on long‐run efficiency and value, there is no inherent conflict between the interests of shareholders and the long‐run interests of other major stakeholders. In such companies, customers, employees, suppliers, and local communities all end up better served.     

The reaction of financial markets to changes in FDIC policies on bank failures

The decade of the eighties was the most turbulent era for commercial banks since the Great Depression. Various bank-related events contributed to this agitation including deregulation, astronomical interest rates, massive bailouts, and great uncertainty. In this study the researchers examine the effects of these events on the cost of the leading source of funds for the banking industry during this period—purchased funds. The results indicate the pricing structure of the federal funds market reacts more to changes in Federal Reserve policy regarding monetary growth and economic stabilization activity than to particular bank problems.     

Paying for performance: Efficiency wages and mutuality

The motivation of individuals lies at the core of corporate governance. For CEOs much research has been directed at the linkage between pay and enterprise performance. The results, however, provide only weak support for the efficacy of profit-related pay. Herein we adopt a different perspective and test for the existence of efficiency wages in a mutual sector wherein the use of traditional control mechanisms is particularly problematic. Our empirical results support the hypothesis that efficiency wages do yield superior performance. We therefore conclude that efficiency wages are a much-needed tool of corporate governance in the mutual sector. Furthermore, as an incentive mechanism, efficiency wages do not require the observability of individual effort, thus they potentially provide an equitable incentive mechanism for all organizations.