Productivity Dispersion and Measurement Error

Several reasons have been put forward to explain the high dispersion of productivity across establishments: quality of management, different input usage and market distortions, to name but a few. Although it is acknowledged that a sizable portion of productivity dispersion may also be due to measurement error, little research has been devoted to identifying how much they contribute. We outline a novel procedure for identifying the role of measurement error in explaining the empirical dispersion of productivity across establishments. The starting point of our framework is the errors-in-variable model consisting of a measurement equation and a structural equation for latent productivity. We estimate the variance of the measurement error and subsequently estimate the variance of the latent productivity variable, which is not contaminated by measurement error. Using Norwegian data on the manufacture of food products, we find that about one percent of the measured dispersion stems from measurement error.     

International Capital Flows in the Model with Limited Commitment and Incomplete Markets

Recent literature has proposed two alternative types of financial frictions, i.e., limited commitment and incomplete markets, to explain the empirical patterns of international capital flows between developed and developing countries in the past two decades. This paper integrates these two frictions into a two-country overlapping-generations framework to facilitate a direct comparison of their respective effects. In our model, limited commitment distorts the investment made by agents with different productivity, which creates a wedge between the interest rates on equity capital vs. credit capital; while incomplete markets distort the investment among projects with different riskiness, which creates a wedge between the risk-free rate and the mean rate of return to risky capital. We show that the two approaches are observationally equivalent with respect to their implications for international capital flows, production efficiency, and aggregate output.     

What’s at Stake in Securitising Climate Change? Towards a Differentiated Approach

Climate change has been successfully represented as a security concern to such an extent that it is firmly established on the political agenda, even though the implementation of concrete policies is disputed. In this paper, we develop an analytical framework to better trace the process of securitising climate change and assess its normative implications. We establish a typology of six climate security discourses on the basis of two dimensions: three levels of referent objects and two logics of securitisation, one that corresponds to the original Copenhagen School framework and one where the threat takes the form of the invocation of risk. We find that there are significant differences in the relative importance of the resulting climate security discourses in Germany and the US, but that normatively, all discourses come with their own problems, which calls for more detailed scrutiny and assessment of climate security discourses and their political effects.     

Deunionization and job polarization – a macroeconomic model analysis for a small open economy

Declining unionization rates and job polarization are two important labor market developments of recent decades. A large body of literature has analyzed these phenomena separately, but little has been done to see whether there is a link between them. We employ a macroeconomic model for a small open economy with a large input–output core to analyze how deunionization may cause job polarization. Our analysis shows that medium-skilled workers are negatively affected by deunionization, mainly as a result of the heterogeneity of the elasticities of substitution between different types of labor. While the elasticities of substitution between high- and medium-skilled labor are relatively low, the elasticities of substitution between medium- and low-skilled are relatively high. As a result, when deunionization leads to increased wage dispersion, we find that demand for low-skilled increases at the expense of medium-skilled labor, thus yielding a more polarized labor market.     

Utilizing environmental information and pricing strategies to reduce externalities of tourism: the case of invasive species in the Galapagos

The increase in demand for nature-based tourism brings economic and educational benefits but risks the introduction of invasive species. Increasing the length of tourist trips can better balance these benefits and risks by maintaining revenues while reducing the number of unique contacts with tourists. Changing the relative prices of trips can induce tourists to take longer trips. We hypothesized that providing information about the negative externalities of tourism could improve the effectiveness of such pricing strategies.

We administered one of two discrete choice surveys to tourists considering a trip to the Galapagos. One of the surveys described the Galapagos as a fragile ecosystem susceptible to invasive species; the second described it as a standard nature-based destination. For each sample, we estimated the probability of the tourist choosing a short versus long trip, given the tourist's personal information and trip options presented to him. We then simulated the demand for trips using three pricing strategies. We found that providing information on invasive species significantly increased the efficacy of strategic pricing. We propose using a two-prong approach to tourism management: educate potential tourists about the islands’ vulnerabilities, and simultaneously increase the per-day cost of short trips relative to that of longer trips.     

Mehrwert für die Marke durch Kommunikation schaffen

Marken ohne Mehrwert haben keine Existenzberechtigung. Nicht immer liegt der Mehrwert jedoch im Produkt oder der Dienstleistung selbst. Vielmehr kann die Kommunikation selbst einen Mehrwert für Marken schaffen. Deshalb wird im folgenden Beitrag gezeigt, wie man den Markenmehrwert einerseits klar kommunizieren und andererseits durch die Kommunikation selbst Mehrwert zum Nutzen für den Kunden und für das Unternehmen schaffen kann.     

Intended brand associations: Do they really drive consumer response?

Brand managers exhibit considerable effort to define intended brand associations to anchor in consumers' minds. They follow a credo deeply rooted in branding literature: intended brand associations drive consumer response and brand equity. This article investigates the benefits of a strong overlap of actual consumer brand associations and management-intended brand associations (brand association match). The article presents results from two large-scale studies (3353 and 1201 respondents) involving one consumer goods and one service brand with multiple operationalizations of consumer response (attitudinal and behavioral). The results show that consumers with high brand association match show more positive brand response. However, after accounting for the valence of associations match does not add explanatory power. This outcome challenges a key foundation of brand management. The discussion identifies reasons why match may not be necessary to achieve response and provides arguments why the results do not imply free play for brand managers.     

Green Project Bonds als finanzielle Alternative für Energieunternehmen

The reorientations of energy policy, and in particular the promotion of renewables, have changed the market conditions for energy companies significantly. Over recent years, the resulting challenges put the energy companies’ financial ratios under severe stress. As the need to invest remains urgent, energy firms seek to broaden and diversify their sources of funding. Against this backdrop, the article addresses an innovative form of securities-based debt financing for energy companies, which explicitly links the financing transaction to the investing of funds in renewable energy projects. Due to the early stage of development of so called green (project) bonds, an initial disambiguation is essential. Thereafter, current market processes, structures and rules are considered. Based hereupon, it is possible to discuss the new opportunities that green project bonds afford energy companies.     

The taxation of bonuses and its effect on executive compensation and risk‐taking: Evidence from the UK experience

This paper explores the effects of a bonus tax adopted in the UK in December 2009 on the compensation structure of executives and on risk‐taking behavior in the financial sector. Excessive bonuses are blamed for encouraging risk taking and are regarded as one of the pull factors of the financial crisis. The British government attempted to reduce bonuses and accordingly bank risk taking by means of a special tax on cash‐based bonuses. Using a comprehensive dataset on executive compensation, we show that the introduction of the bonus tax decreased the net cash bonuses awarded to directors by about 40%, accompanied, however, by a simultaneous increases in other forms of pay leaving total compensation as well as risk levels unaffected.