Termination fees revisited

We reconsider the question of the optimal level of termination fees between communication networks in the context of heterogeneous usage and elastic participation. The interaction between these two features yields new insights; in our model: i) The profit maximizing reciprocal termination fee is above marginal cost; ii) the welfare maximizing termination fee is also above cost; iii) the welfare-maximizing termination fee is below the profit-maximizing one in the absence of termination-based price discrimination, but can be above it otherwise.     

Strategic conduct in credit derivative markets

This paper reviews recent research at the intersection of industrial organization and corporate finance on credit default swap (CDS) markets. These markets have been at the center of the financial crisis of 2007–09 and many aspects of their operation are not well understood. The paper covers topics such as counterparty risk in CDS markets, the "empty creditor problem," "naked" CDS positions, super-senior status of credit (and other) derivatives in Chapter 11 bankruptcy, and strategic behavior in CDS settlement auctions.     

Teaching the Concept of Risk: Blended Learning Using a Custom-Built Prediction Market

There has been much research into the role of technology in promoting student engagement and learning activity in third-level education. This article documents an innovative application of technology in a large, undergraduate business class in risk management. The students' learning outcomes are reinforced by activity in a custom-designed prediction market. The content of lectures are closely aligned to the student objectives within the prediction market, thus allowing the application of risk management practice while building knowledge through traditional delivery methods.     

Knowledge spillovers, collective entrepreneurship, and economic growth: the role of universities

To improve our understanding of the role that universities play in facilitating the transmission of knowledge to private-sector business enterprises so as to generate economic growth, this article builds on the Knowledge Spillover Theory of Entrepreneurship to develop a formal model of university-with-business enterprise collaborative research partnerships in which the outcome is both mutually desirable and feasible. This model shows that if a university seeks to act as a complement to private-sector collaborative R&D so that it will be attractive to both incumbent firms and startup entrepreneurs, it needs to structure its program so that business enterprise revenues increase and business enterprise R&D costs rise by a smaller proportion than revenues increase, if they rise at all (and a fall would be better). Such a structure is consistent with both business enterprise and university interests, but is only likely to be feasible if the university is subsidized to cover the cost of such public-private collaborative research partnerships. In the absence of such support, the university will have to cover its costs through a fee charged to participating business enterprises and that will result in the university being seen as a substitute rather than a complement to private-sector collaborative R&D, and thus the university will be seen as an unattractive partner for many business enterprises.     

Corruption and industrial dualism in less developed countries

This paper provides an explanation for the observation that developing countries tend to have a higher degree of dualism in the size distribution of firms and a relatively smaller proportion of large firms than do developed countries. This paper builds a model where large 'formal' firms attract rent seeking activities from the government while small firms do not. In the model, there exists a 'competitive fringe' of small firms and a formal market consisting of Cournot competitors. The number of formal firms is made endogenous and is a function of the degree to which the government can extract rents. This ability to extract rents is itself posited as a function of the degree of corruption in a country's government. Thus, it is the high degree of corruption in developing country governments that contributes to the dual nature of their industrial structure. The model predicts that the higher the degree of corruption, the fewer (and larger) are the formal firms, the lower is social welfare and the greater is dead-weight loss, and the higher are government rents. An examination of the size distribution of 16 countries and their degree of corruption shows that the degree of corruption is a good predictor of the percentage of large firms in an economy.     

Developing Consumer-Based Service Brand Equity via the Internet: The Role of Personalization and Trialability

The commercialization of the Internet has provided opportunities for building service brands in the minds of consumers. Services are characterized as intangible, heterogeneous, inseparable, and perishable features that often engender high information costs and, hence, low perceived value to potential consumers. When a service is available via the Internet—a medium that can subdivide and rebuild the service into personalized offerings—potential consumers become better informed in advance of what the service provides. The Internet also permits most services to be trialable before consumption. These new features, empowered by the Internet, have important implications for what we call consumer-based service brand equity (CSBE), the value that potential consumers assign to a service brand. This article investigates the effects of service personalization and trialability on the development of CSBE of Internet banking service, a typical service available via the Internet. Results from a laboratory experiment indicate that both service personalization and trialability have significant positive influences on the development of the CSBE of an Internet banking service brand. While personalization was found to indirectly influence CSBE development by mediating the perceived benefits of the brand, trialability exerted both a direct and an indirect effect. Trialability developed the brand's CSBE by first mediating the information through gathering cost savings and then the perceived benefits of the brand. Implications of the study's results are discussed.     

The advertising effectiveness of different levels of intensity of humour and warmth and the moderating role of top of mind awareness and degree of product use

Responses to three different intensity levels of warmth (none, moderate and high) and three different levels of humour were investigated as well as the moderating role of top of mind awareness and degree of product use. Affective responses, attitude towards the advertisement (Aad) and the brand (Ab) and the favourableness of advertisement-related cognitions were enhanced by the use of warmth although the intensity level (moderate versus high intensity) did not seem to matter. As far as humour was concerned, a high-intensity humorous appeal induced most favourable affective responses, Aad and advertisement-related cognitions, while a moderate level of humour was most conducive for a favourable Ab and brand-related cognitions. Significant interaction effects suggested that the most positive advertisement effects can be obtained by combining high levels of warmth with high levels of humour, while the most positive brand effects can be obtained by combining high levels of warmth and moderate levels of humour. Emotional executions of high intensity led to the most positive affective and cognitive reactions in the case of brands that are not top of mind and to the most positive cognitive reactions in the case where the respondent was a heavy user of the product category. In particular the intensity level of humour led to significant communication effects.     

Europeanisation and Discourse Building: The European Commission,European Narratives and European Neighbourhood Policy

Europeanisation is a legitimising process through which the European Union strives to gain meaning, actorness and presence internationally. However, this process continues to be described in less than complimentary ways as ambiguous, incomplete, unsettled, or impotent. We contend that it is the contradictory demands of negotiating order at the ‘internal’ and ‘external’ levels both operationally and normatively which critically affect the EU's ability to achieve presence and actorness in international affairs. In this paper we focus upon the role of the European Commission in the external projection of Europeanisation towards the Mediterranean with an emphasis upon the discursive construction, performance and survival of Europeanisation. We show the ways in which the external projection of Europeanisation produces fuzziness and messiness in which the Mediterranean emerges as both a chaotic conception and site of chaos.     

The Role of Incongruency and Involvement in Destination Print Advertising

Through advertising, marketers place their ads in an environment overpopulated with information, competing with hundreds of other advertisers for the same consumer attention. One approach used in the creative development of ads is the inclusion of information that is incongruent with consumers' expectations. The goal of this study was to investigate the role of information incongruency and message involvement through the pictorial element of tourism print ads. The attitudinal evaluations of ad viewers were measured for various combinations of incongruency and message involvement, for a better understanding of how to design effective destination print ads. Linear mixed modeling was used to explore the relationships among various constructs like incongruency, involvement, attention, cognitive, and affective attitude. The findings of this study potentially suggest ways to advertise destination attractions in print ads.