NO MARGINAL ARBITRAGE OF THE SECOND KIND FOR HIGH PRODUCTION REGIMES IN DISCRETE TIME PRODUCTION–INVESTMENT MODELS WITH PROPORTIONAL TRANSACTION COSTS

We consider a class of production–investment models in discrete time with proportional transaction costs. For linear production functions, we study a natural extension of the no‐arbitrage of the second kind condition introduced by Rásonyi. We show that this condition implies the closedness of the set of attainable claims and is equivalent to the existence of a strictly consistent price system under which the evaluation of future production profits is strictly negative. This allows us to discuss the closedness of the set of terminal wealth in models with nonlinear production, functions which may admit arbitrages of the second kind for low production regimes but not marginally for high production regimes.     

Consumer Motivation for Reward Pursuit: A Culture-Based and Progress-Based Model of Loyalty Program Effectiveness

Aided by the exponential rate of globalization and digitalization, reward or loyalty programs (LPs) have attained global reach. Paradoxically, however, dropout rates of LPs have averaged over 75%. This disconcerting statistic, coupled with the lack of culture-specific insights in the literature, points to a research area of great theoretical and practical importance. To address the aforementioned issues, we develop a culture-based and progress-based model of consumer motivation that is especially applicable to LP members. Drawing on cross-cultural literature and goal pursuit theory, our research enriches a field that is inherently global in nature. Through a series of research propositions that elucidate how Western individualist (vs. Eastern collectivist) consumers are differentially motivated to pursue LP rewards, we advance theoretical understanding of reward-induced behavior across cultures and offer useful insights for global managers of LPs.     

The Advertising Association's Index of Press Cover Prices

This paper examines the differences between American young consumers and their Korean counterparts’ interests in accepting SMS advertising via their mobile phones. The appeal of using the mobile phone as an advertising medium is its accessibility because it can pinpoint the locations of mobile phone users. The results of the study provide preliminary evidence that consumers’ attitudes and beliefs do have significant positive relationships with intentions to opt in to the new medium. The theoretical model for the study is based on employing the theory of reasoned action as the underlying structure to operationalise the conceptual constructs proposed in the diffusion theory. The study identifies the potential of a new research domain in advertising, presents a conceptual framework for its examination and suggests the importance of constructs under study.     

Do the magnitude and asymmetry of specific asset investments matter in the supplier–buyer relationship?

Abstract

Despite a body of literature on specific asset investments, the extant literature falls short of exploring the magnitude and symmetry of specific asset investments in supplier–buyer relationships. This paper builds on prior research to identify and examine the impact of total and asymmetric specific asset investments on commitment, trust, and conflict in supplier–buyer relationships. Covariance structure analysis is used to analyse survey data. The results show that total SAI are positively related to commitment and trust, while asymmetric SAI are negatively related to trust and positively related to conflict in supplier–buyer relationships. Decision-making uncertainty affects trust, commitment, and conflict more than any other variables. Therefore, firms should work to strengthen their relationships by increasing the magnitude of specific asset investments with the aim of increasing trust and commitment. We also discuss the limitations of this study and suggestions for future research.     

BOLIVIA AND SOUTH AMERICAN FREE TRADE

The pending merger between the Andean Pact and Mercosur will advance South American free trade. Each member country will have to adjust to free trade and the various sectors of each economy will adjust differently. This article uses a specific factor model of production to predict output changes and income redistribution in Bolivia with South American free trade. Adjustments in outputs and factor prices in the model are substantial.     

Productivity and Trade During the Softwood Lumber Dispute

The gap in total factor productivity in sawmills and wood preservation between the US and Canada generally increased from 1958 to 2005. The present paper examines the effects of the various phases of the softwood lumber dispute, including relatively free trade, Canadian export taxes, and low and high countervailing duties, on this productivity gap. Exogenous control variables include US housing demand, the exchange rate, softwood lumber prices, and ratios of capital and nonproduction labor to labor. The effects of phases of the dispute on US imports from Canada are also examined.     

An Examination of Sales Promotion Programs in Hong Kong: What the Retailers Offer and What the Consumers Prefer

This study gives an insight into the retailer's capability of managing sales promotion by examining the sales promotion programs offered by Hong Kong cosmetic and toiletry retailers and the consumers’ preferences. The results indicate that instant-reward programs are popular among retailers and preferred by consumers. The results also show that the preferences for sales promotion programs are dependent upon consumers’ demographic and sociocultural characteristics. Implications for advertisers designing and communicating sales promotions are offered.     

Output-inflation tradeoffs in 34 countries

This article examines the responsiveness of real output to the variability of inflation and aggregate demand. In the manner of Lucas (1973), estimates of the output-inflation tradeoff are computed for a large sample of countries. This measure is then correlated with the variances of the inflation rate and the growth rate in nominal income. Because differences in inflation variance (and hence the tradeoff) are viewed as the outcomes of differences in demand variance, correlations between these two variables are also reported. Cross-time and cross-country results provide a good measure of support for Lucas and the notion that attempts to exploit the tradeoff weaken it.     

Bribery in international business: Whose problem is it?

Bribery is a frequently discussed problem in international business. This article looks at the problem from the North American and from the developing country perspective. It describes and analyses specific cases and highlights recurring patterns of behavior.The article is based on the experiences of the authors who have been promoting business in the developing world. In addition to ethical considerations involved with bribery there are some very practical reasons for not engaging in the practice. There are also real barriers to establishing the relationships necessary to avoid the practice yet continue doing business. Henry W. Lane is Associate Professor of Organizational Behavior at the School of Business Administration, The University of Western Ontario, London, Ontario. He is at present Director of the Centre for International Business Studies. His most important publication is: Managing Large Research and Development Programs (with Rodney Beddows and Paul R. Lawrence), (State University of New York Press, Albany, 1981).Donald G. Simpson is Associate Professor at the University of Western Ontario. He is at present Associate of the Centre for International Business Studies. He was formerly Associate Director of Social Sciences Division at the International Development Research Centre, Ottawa, Canada and Executive Director of the Office of International Programs, University of Western Ontario.     

Firms' acquisition decisions and Tobin's q ratio

We develop the hypothesis that Tobin's q ratio signals favorable opportunities for a firm to make acquisitions and then undertake an empirical test of this hypothesis within the context of a more general “multicausal” model. The results of this test support our hypothesis. The empirical study is also notable in that our data consists of a representative sample of large manufacturing firms (selection to the sample is not conditional upon merger activity) and the time period covered (1971–1978) postdates the conglomerate merger boom era of the 1960s.