Input Pricing and Market Share Delegation in a Vertically Related Market: Is the Timing Order Relevant?

This paper adds to the literature on the strategic use of managers’ contracts in competition by examining whether market‐share delegation, in which managers receive rewards based on a combination of profits and market share, and the order of moves affect input pricing in a vertically related market. It shows that: (i) input pricing is not affected by delegation form and the order of moves between upstream and downstream firms under quantity competition; (ii) downstream firms obtain the same profit as in the simple Nash equilibrium regardless of delegation forms in a delegation–input price–quantity competition game; and (iii) the upstream monopolist will set input price beforehand regardless of the delegation form. Since the outcomes in our model create higher quantity and lower price in a Cournot product market, it lessens the double‐marginalization problem in such a vertically separated industry.     

Sales force modeling: State of the field and research agenda

Inspired by Erin Anderson’s contributions to sales force research, this paper focuses on research that utilizes quantitative models to investigate important questions in sales force management. The purpose is to summarize several significant developments in knowledge over the last 40 years and identify major opportunities for impactful theoretical, empirical, and decision model-based research in the future.     

Total quality management and the human resource professional: Applying the baldrige framework to human resources

The still evolving discipline of total quality management (TQM) has left many humanresource professionals confused about their role. The authors believe that the HR function personnel should spearhead company quality efforts, as well as assess the performance of their own function, by using the Malcolm Baldrige National Quality Awards framework.     

The refinancing threshold pricing model: An economic approach to valuing MBS

Investigation of MBS prepayment data indicates that mortgagors have different interest rate levels, or thresholds, at which they exercise their option to prepay their mortgage. In order to properly value an MBS with heterogeneous mortgagors, Merrill Lynch has developed the Refinancing Threshold Pricing Model (RTP). The RTP model focuses on the refinancing decision of the mortgagor when pricing the mortgage pool. The model divides each pool into groups of mortgagors who share similar refinancing costs. Using market data, the RTP model endogenously determines both the implied costs that mortgagors face, as well as the proportion of the MBS pool in each refinancing cost group. In addition to determining pool value, the RTP model also calculates MBS duration, dP/dY and convexity. Comparison between RTP model values and actual market data reveals a strong correlation. The RTP has a wide range of applications, including valuing 15-year and 30-year conventional MBS; pricing interest-only (IO)/principal-only (PO) derivative MBS; determining new versus seasoned MBS price spreads; and valuing specific MBS pools.The information set forth was obtained from sources we believe reliable, but we do not guarantee its accuracy. Neither the information, nor any opinion expressed constitutes a solicitation by us for the purchase or sale of any securities or commodities. Merrill Lynch, Pierce, Fenner & Smith, Inc. or its affiliates may have either a long or short position in, and may buy and sell for its own account or the accounts of others, these securities.     

ON USING THE BLACK-SCHOLES MODEL TO VALUE WARRANTS

In this paper ad hoc procedures that employ the Black-Scholes model in the valuation of warrants are examined. Findings indicate that the Black-Scholes model unadjusted for either dividends or dilution undervalues out-of-the-money warrants with short expirations. An adjustment for dilution improves the valuation for longer-term warrants of firms that do not pay dividends. For dividend-paying firms, findings suggest that it is better to adjust for dividends than for dilution when warrants are in the money or have expirations exceeding four years.