On the role of consumer expectations in markets with network effects

We analyze the role of consumer expectations in a Hotelling model of price competition when products exhibit network effects. Expectations can be strong (stubborn), weak (price-sensitive) or partially stubborn (a mix of weak and strong). As a rule, the price-sensitivity of demand declines when expectations are more stubborn. An increase of stubbornness (i) increases (decreases) the parameter region with a unique duopoly equilibrium (multiple equilibria), (ii) reduces competition, (iii) reduces the conflict between consumer and social preferences for de facto standardization, and (iv) reduces the misalignment between consumer and social preferences for compatibility.     

Disentangling barriers to internationalization

Abstract. Recent literature on multinational firms has focused on low productivity as a barrier to the internationalization of firms. But labour market frictions or financial constraints may also hamper internationalization. In order to assess the importance of these barriers, we present new empirical evidence on the extensive and intensive margin of exports and foreign direct investment (FDI) based on micro‐level data of German firms. First, we find a positive impact of firm size and productivity on firms’ international activities. Second, labour market frictions can constitute barriers to foreign activities. Third, self‐reported financial constraints have no impact on firms’ internationalization decisions. JEL classification: F23, G2     

Decreasing absolute prudence: Characterization and applications to second-best risk sharing

In this paper, we provide two basic properties of utility functions u which exhibit decreasing absolute prudence i.e. (− u/u″)′ ≤ 0. These properties are used to examine the allocation of risks in an economy when some agents bear non-transferable risks. We show that it is fair Pareto-efficient to let those with a non-transferable risk bear relatively less of the transferable risk in the economy if and only if absolute prudence is decreasing. In another model, there is a complete set of contingent markets, but some agents have no direct access to them. We examine the fair efficient allocation of risk in a pool gathering a trader and a non-trader. Decreasing absolute prudence provides an upper bound to the share of the pool's risk that should be borne by the trader.     

Racial Harassment,Ethnic Concentration,and Economic Conditions*

In this paper, we analyse the association between the spatial concentration of ethnic minorities and racial harassment. Ethnic concentration relates to racial harassment through at least three channels: hostility in the attitudes of majority individuals that finds expression in harassment behaviour, the probability that minority individuals meet majority individuals, and the cost of expressing hostility aggressively. Thus, harassment cannot simply be modelled as a stronger form of hostility. Using unique data for Britain, we show that, in areas of higher local ethnic concentration, experience of harassment is lower, even though hostility on the side of the majority population is not.     

The role of ethics and product personality in the intention to purchase organic food products: a structural equation modeling approach

The aim of the present study is to examine the role of ethical dimensions and product personality in the purchasing intention of organic food products. The Prospect method (Caprara et al. in Test Psicomet Metodol 7(3–4):113–128, 2000), which integrates the Five factors model of personality (cf. Digman in Annu Rev Psychol 41(1):417–440, 1990) and the Theory of planned behavior (Ajzen in Organ Behav Hum Decis Process, 50(2):179–211, 1991) extended to an ethical dimension, was employed, by using a Structural Equation Modeling approach. Results showed that moral norms—i.e., personal beliefs regarding what is right or wrong (Parker et al. in Br J Soc Psychol, 34(2):127–137, 1995)—can be considered the main motivator of purchasing intention, and they are, in turn, affected by subjective norms and product personality traits of Naturalness and Authenticity. Marketing implications for firms operating in the organic food industry are discussed, in their intent to shift from a “niche” market to a broader diffusion of these products.     

Multidimensionales Verfahren zur Bestimmung des Regelleistungsbedarfes unter Berücksichtigung von Unsicherheiten

One of the most crucial constraints in operation of electrical power supply systems is the permanent balance between generation and load. Reserve power is held ready to be able to keep this balance also in case of the occurrence of unpredictable events like power plant outages or inevitable deviations of power injections from their predicted values. At this, the allocation of operating reserves is in the field of conflict between level of reliability and cost effectiveness. The amount of reserve generation capacity required in a control area heavily depends on prediction quality which constitutes the need for high quality predictions. This article is about the influence of prediction quality on the amount of reserve generation capacity required in a control area. The algorithms for the assessment of required reserve generation capacity known from literature use the variation calculus technique to account for the aforementioned unpredictable events and prediction errors. In this article, an extension to a convolution-based method is presented in which the uncertainties of the predictions are expressed using intervals. Each parameter is represented by an independent dimension, assuming statistical independence among them. This allows the distinct analysis of each parameter’s influence on the amount of required reserve generation capacity. In addition, two methods for the visualization of the multi-dimensional results are presented, allowing a comprehensive analysis of the parameters’ influences. Standard distribution functions are used to represent the parameters for the simulation and the results are shown as probability density functions of possible imbalances. Based on forecasts of the development of conventional power plants and regenerative generation in the years 2020, 2030 and 2040, the required control power of the future German transmission system is calculated. Influences and dependencies are identified with the extended convolution-based method.     

Corporate sustainability strategies in institutional adversity: Antecedent,outcome, and contingency effects

This study examines (i) how top-level managerial institutional ties drive corporate sustainability strategies of emerging market firms operating under conditions of institutional adversity; (ii) the impact of corporate sustainability strategies on market performance; and (iii) the moderating role of financial resource slack on the relationships between corporate sustainability strategies and market performance. The study builds from institutional development logic and the structure–conduct–performance paradigm. Primary data are collected from 300 firms operating in a major sub-Saharan African market. Findings show that top-level managerial institutional linkages with regulatory national governmental officials, local community leaders, and top managers at other firms drive corporate proactive and responsive sustainability strategies, which in turn influence market performance. In addition, the findings reveal that financial resource slack strengthens the path between corporate proactive sustainability strategies and market performance, but not the path between corporate responsive sustainability strategies and market performance. Theoretical and practical implications are discussed.