Are Bank Mergers Good News for Shareholders? The Effect of Bank Mergers on Shareholder Value in Japan

This study investigates the effects of bank mergers on the welfare of affiliated client firms. The findings demonstrate that, in general, bank mergers increase the welfare of client firms. However, there are significant differences in the impact of a bank merger on client firms across different merger, bank, and firm characteristics. Client firms of banks involved in mega‐mergers do not enjoy an increase in welfare. Client firms of undercapitalized banks in fact suffer significant welfare losses. In the long‐run, weak “zombie” firms also in many cases experience welfare losses following the announcement of a merger by their main bank.     

What Makes a Good Cargo Bike Route? Perspectives from Users and Planners

Cargo bikes—bicycles made to carry both goods and people—are becoming increasingly common as an alternative to automobiles in urban areas. With a wider and heavier body, cargo bikes often face problems even in the presence of cycling infrastructure, thus limiting their possibilities of route choice. Infrastructure quality and the route choices of cyclists have been well studied, but often solely based on a quantitative approach, leading to tools such as BLOS (bicycle level of service). With various designs of cargo bikes being used for a wide range of purposes, the route choice of cargo bike users is difficult to generalize. This study combines quantitative and qualitative approaches in order to explore what is important for cargo bike users’ route choice, and how this knowledge can be effectively used for planning. Our results suggest that while some general preferences exist, route choice involves complex dynamics that cannot be fully explained by quantitative measures alone: in addition to understanding “what” is important for cargo bike users, we need to understand “why” it is important. Furthermore, route choice is also influenced by the city context, making a study tailored to the local context essential.     

Does policy reform promote FDI in developing economies? a firm-level simulation approach

How do policy reforms for foreign investors in developing economies affect inward foreign direct investment? Using a firm heterogeneity model calibrated to match data on Japanese multinational firms, we simulate how multinationals respond to a decline in investment procedure days. We find that such policy reforms in investment procedures significantly increase the aggregate entries and sales of multinational firms in developing economies, with the more pronounced impact at the extensive margin than at the intensive margin. At the firm level, declining entry costs encourage more productive firms to invest in a wider range of markets although such impacts are modest for the most productive firms that already penetrate many markets. The impacts on foreign sales per multinational firm are less clear-cut in magnitude across productivity levels in part because falling entry costs directly increase multinational entry to developing economies, but only indirectly encourage their existing production in these markets.     

A laboratory assessment of the choice of vessel size under individual transferable quota regimes

This paper examines the effect of individual transferable quota regimes on technology choice, such as choice of vessel size, by using the laboratory experiment method. We find that even if vessel sizes change over time, the quota price can converge to the fundamental value conditioned on the vessels chosen. We also find that subjects choose their vessel type to maximise their profits based on the quota trading prices in the previous period. This result implies that the efficiency of quota markets in the beginning period is important because any inefficiency in quota markets may affect vessel sizes in ensuing periods. Moreover, we find that the initial allocations may significantly influence vessel sizes through two channels: first, a higher initial allocation to a subject increases the likelihood that the subject invests in a large‐sized vessel; second, the quota price may be higher and more unstable under unequal allocation than under equal allocation; thus, whether the allocation is equal influences subjects' choice of vessel type.     

The Effects of Uncertain Divestiture as Regulatory Threat

It has been argued that the threat of regulatory intervention affects firm behavior. We investigate the pricing decision of the dominant firm under regulatory threat, considering the probability of intervention as a function of the price. Our focus is on the case where the potential divestiture of the firm serves as a threat of regulatory intervention. It is shown that under certain conditions associated with the marginal expected penalty, the mere threat of divesting a certain portion of the firm’s manufacturing plants leads to a lower price than the actual divestiture of that same portion. Numerical examples illustrate that with relatively small-scale divestiture, the firm’s price under the threat may be lower than that under the actual divestiture, within a relatively broad range of regulator’s attitudes toward intervention.     

Does Aid for Roads Attract Foreign or Domestic Firms? Evidence from Cambodia

Less developed countries have received substantial foreign aid for transport infrastructure, making its quantitative assessment important. To investigate the effect of aid for road infrastructure on the location of foreign and domestic firms, this study employs the first comprehensive census on all business establishments in Cambodia for 2011 and measures the geographical distribution of aid disbursements in roads. Estimating a negative binomial model, we find that aid disbursements in roads have little influence on the entry of foreign and domestic firms across communes. Compared with the aid effect, the location of firms is more strongly influenced by other determinants such as population size, electricity access, and labor supply.     

On the role of job assignment in a comparison of education systems

Abstract This paper re‐examines how differences in systems for financing education influence GDP by highlighting a neglected function of education policy: it affects the magnitude of gains from job assignment. When more productive jobs demand more skill, privately financed education can increase productivity gains from matching between jobs and skill by increasing the availability of highly educated people. This differs from the standard argument that publicly financed education increases the total amount of human capital by equalizing educational opportunities. It is shown that if job opportunities have large variations in productivity, education policy may face a serious efficiency–equity trade‐off.     

On the equivalence of the Arrow impossibility theorem and the Brouwer fixed point theorem when individual preferences are weak orders

We will show that in the case where there are two individuals and three alternatives (or under the assumption of the free-triple property), and individual preferences are weak orders (which may include indifference relations), the Arrow impossibility theorem [Arrow, K.J., 1963. Social Choice and Individual Values, second ed. Yale University Press] that there exists no binary social choice rule which satisfies the conditions of transitivity, Pareto principle, independence of irrelevant alternatives, and non-existence of dictator is equivalent to the Brouwer fixed point theorem on a 2-dimensional ball (circle). Our study is an application of ideas by Chichilnisky [Chichilnisky, G., 1979. On fixed points and social choice paradoxes. Economics Letters 3, 347–351] to a discrete social choice problem, and also it is in line with the work by Baryshnikov [Baryshnikov, Y., 1993. Unifying impossibility theorems: a topological approach. Advances in Applied Mathematics 14, 404–415].     

Trait perceptions influence economic out-group bias: lab and field evidence from Vietnam

Group favoritism is typically directed toward in-group members and against out-group members, but these cross-group effects often vary. Little is known about why group effects on economic choices vary. We use a survey method developed in social psychology to measure stereotyped attitudes of one group toward another. These attitudes are then associated with prosociality in five experimental games (also using an unusual amount of individual-level sociodemographic control). We present evidence from an artificial field experiment of a majority group with high status (Vietnamese) exhibiting no disfavoritism toward a lower-status out-group (Khmer) and typical disfavoritism to a second out-group (Chinese). Both Vietnamese and Chinese groups see the Khmer as warm but incompetent, attitudes which seem to activate empathy rather than contempt. The results suggest that measuring between-group stereotype attitudes can be used to predict the sign of cross-group favoritism in other natural settings.