Can a margin squeeze indicate the need for deregulation? The case of fixed network voice telephony markets

In the beginning of fixed network liberalisation in Europe in the late 1990s, the main concern of regulators was to lower retail call prices. This was done by introducing wholesale regulation and promoting service-based competition. Some years later, the concern of some regulators turned from too high retail call prices to too low call prices, which might ‘squeeze’ entrants out of the market. This paper looks at a simple model in which this development is explained by increasing competitive pressure from an ‘outside opportunity’, most notably mobile telephony and cable. It is concluded that a margin squeeze is not necessarily used by the incumbent as a device to drive competitors out of the market and to increase market power but can also result from increased inter-modal competition. If this is the case, it is argued that the appropriate response would be deregulation or – under particular circumstances – a switch from cost-oriented access prices to alternatives such as retail-minus or capacity-based interconnection.     

History of Thought as Ceremonial Genealogy: The Neglected Influence of Herbert Spencer on Thorstein Veblen

Large corporations are invariably structured as formal institutions, and this formality is reflected in organizational charts. These charts depict a multilevel managerial hierarchy of authority within the organization typified, in the simplest case, by a pyramid. Many economic and business researchers attribute formality to a desire for greater efficiency, although I do not take this position in the present paper. Instead, I agree with researchers who connect formality with organizational legitimacy. I further argue that personal interests are at work in bigness and formalization. Top managers are motivated by desire for power and prestige. Formality furthers these objectives by rigidly fixing relations and ranks within the organization. Widespread belief in efficiency and legitimacy converge with personal motives to encourage and entrench formality. Corporate size and structure are seen as having deleterious effects on employees and society at large. But they also have some negative impacts on those at the top.     

Sectoral Interests and Global Money: Renminbi, Dollars and the Domestic Foundations of International Currency Policy

In deciding whether to support an international role of their country’s currency, national policymakers are often influenced by lobbying from domestic sectoral groups. While these groups will be consistently more interested in some implications of international currency issuance than others, their specific preferences are likely to be highly context specific. Looking at the cases of the United States and China, we anticipate that domestic sectoral lobbying is unlikely to pressure either the US government to defend the dollar’s international role vigorously or the Chinese government to internationalize the renminbi fully. From this domestic sectoral perspective, the future looks to be characterized by reluctant monetary leaders rather than increasingly aggressive currency competition between the United States and China.     

The investment effects of price caps under imperfect competition: A note

We examine the impact of price cap regulation on the capacity investments of oligopolistic suppliers facing time-varying demand. We find that binding price caps set above long-run marginal cost increase (rather than decrease) aggregate capacity investment.     

Budgetdefizite und Finanzierungsüberschüsse

In den Stabilit?ts- und Wachstumspakt ist die 3%-Defizitgrenze für den Staatshaushalt vor allem deshalb eingebaut worden, weil eine zu hohe Beanspruchung des gemeinsamen Kapitalmarktes der Eurozone verhindert werden sollte. Welche Erkenntnisse lassen sich zur tats?chlichen Inanspruchnahme des Kapitalmarktes aus den Finanzierungssalden der Volkswirtschaftlichen Gesamtrechnung gewinnen? Wie ist bei solch einer Betrachtung das Argument der Generationengerechtigkeit zu beurteilen? Welche Folgen h?tte gegenw?rtig eine Haushaltskonsolidierung?     

Optimal Inflation Contracts and Inflation Targets with Uncertain Central Bank Preferences: Accountability Through Independence?

This paper examines some problems which arise when monetary policy is delegated to an independent central bank and where the central bank's preferences are unknown. Two key conclusions emerge from the paper. First, even with optimal targets or contracts, central bank independence may not always be desirable because central banks may have distorted preferences relative to society. Second, if the delegation solution is preferable, and the independent central bank responds to information about supply shocks, the central bank may be made more accountable by allowing it to set its own inflation targets, i.e. by making it goal-independent     

Market as a Weapon: Domination by Virtue of a Constellation of Interests

The neoclassical approach toward explaining domination in the market is confronted with the approach of critical theory. Special attention is paid to domination by virtue of a constellation of interests in the market. This requires a particular technique for imposing will, namely conditional access to the market field. Interactions are modeled taking a field of domination composed of three organizational actors, one of them performing the function of drawing boundaries and controlling access. The concept of territoriality as spatially embedded power is applied to organization studies. Only one actor in the field has the ability to maximize its satisfaction, the two others minimize missed opportunities.     

Credibility and monetary policy in a model with growth

We examine the implications for monetary policy design of includinglearning-by-doing effects in a macroeconomic model. We showthat an inflation bias arises because monetary surprises maybe exploited to maximise potential output by temporarily raisingthe rate of human capital accumulation. Our model also providesan alternative explanation for the empirical evidence linkinginflation and growth, where the causal link goes from slow growthto high inflation. Unlike traditional credibility models, aninflationary bias can persist even when the authorities do notwish to offset labour market distortions through monetary surpriseswhich undercut the median voter's income.     

Coupling urban expansion models and hydrological models: How important are spatial patterns?

It is well known that urban expansion has a severe impact on the surface water balance by transforming vegetated covers into sealed surfaces. This transformation causes changing fluxes of evapotranspiration, surface runoff and groundwater recharge. In order to estimate the impact of land cover changes on the surface hydrology, hydrological models are often coupled with different types of land cover change models. It is, however, not clear to what extent spatially-explicit urban expansion scenarios provide an added value in comparison with non-spatial urban expansion models at different scale levels. The objective of this paper is to acquire a better insight in the importance of scale effects involved in the coupling of urban expansion scenarios and hydrological models. The relative importance of using different projections of both (i) quantity and (ii) spatial patterns of urban expansion was analysed at four different scale levels. The highly urbanised Flanders–Brussels region was taken as an example application. Twelve different urban expansion scenarios for 2025 and 2050 were developed and subsequently used as an input in a spatially-distributed water balance model. The results obtained suggest that at the level of the Flanders–Brussels region, an accurate estimation of the quantity of urban expansion should get priority over an accurate projection of the spatial patterns. However, the importance of using accurate projections of the spatial pattern of urban expansion increases systematically at local scale levels. A uniform strategy for coupling urban expansion models and hydrological models thus seems inappropriate. These findings are highly relevant for water management and spatial planning policymakers that typically operate at different administrative levels.     

Detecting the impact of the “Grain for Green” program on the mean annual vegetation cover in the Shaanxi province, China using SPOT-VGT NDVI data

In order to reduce the soil erosion rate on the Chinese Loess Plateau, the Chinese government launched in 1999 the “Grain for Green” program (GfG). The objective of this program was to increase the forest cover on steep slopes in the landscape by planting trees and sowing grasses on former cropland. The program was a massive investment by the Chinese government. By the end of 2005 the GfG-program was implemented in an area of 87,000 km² in which about 400–600 million trees were planted. At present it is not known to what extent this program was successful. This paper examines the effects of the GfG-program on the mean annual vegetation cover in the Shaanxi province. A decadal time series of SPOT VEGETATION imagery from 1998 till 2005 were used to calculate NDVI-values in four counties with different rainfall regimes. By means of a regression between preceding rainfall and NDVI-values the effects of rainfall variability were filtered out. A trend analysis of the corrected NDVI time series pointed out that the GfG-program resulted in a significant increase of the vegetation cover on farmland in the northern part of Shaanxi province. In the southern part of the province, which has a more humid climate and large areas of irrigation farmland no significant increase of the vegetation cover on farmland could be detected.