Endogenous Cartel Formation

This paper investigates the endogenous formation of cartels in a supergame framework in which cheating on the cartel agreement results in the ejection of only the defector from the cartel while collusion continue s amongst the non-cheating members. A more sophisticated notion of cartel stability than has been analysed hitherto is developed here, and it is shown that cartels are even less stable than they are generally believed to be. When firms produce heterogeneous goods and set prices, cartels comprising a small fraction of the industry's firms are shown to be viable. The emergence of two or more cartels within the same industry is seen not only to be a distinct possibility but also to be quite likely     

Genetically Modified Food Market Participation and Consumer Risk Perceptions: A Cross-Country Comparison

As developing nations look to become more competitive in world agricultural markets, genetically modified (GM) crops are one avenue of pursuit. However, fears of primary export market loss, negative media attention, and adverse government regulations often hinder GM crop implementation and increase GM food risk perceptions among domestic consumers. In this study we analyze consumer surveys of GM food purchase propensity conducted in the developing countries of Romania and China. Through the examination of marginal effects and the drivers of purchase propensity, we find that in spite of demographic and psychographic similarities, consumer willingness to purchase GM foods is quite different between the two samples. Consumer preferences are largely dependent on risk perceptions, which are high in the Romanian sample, but low in the Chinese sample. Additionally, the effect of regressors on GM purchase propensity is invariant across foods in Romania, but distinctly different across foods in China, possibly due to the stated nutritional enhancement (vitamin A) in GM rice. Comme les pays en développement cherchent à devenir plus concurrentiels sur les marchés agricoles mondiaux, les cultures génétiquement modifiées (CGM) constituent une avenue. Cependant, la crainte de perdre les principaux marchés d'exportation, l'attention médiatique négative et les règlements gouvernementaux défavorables retardent souvent l'ensemencement de CGM et augmentent la perception des risques liés aux aliments génétiquement modifiés (AGM) chez les consommateurs nationaux. Dans la présente étude, nous avons analysé des enquêtes auprès des consommateurs sur la propension à acheter des AGM dans les pays en développement, notamment la Roumanie et la Chine. En examinant les effets marginaux et les facteurs de propension à acheter, nous avons trouvé que, malgré des similarités démographiques et psychographiques, la volonté des consommateurs à acheter des AGM variait considérablement dans les deux échantillons. Les préférences des consommateurs dépendent grandement de la perception des risques, qui était élevée dans l'échantillon de la Roumanie et faible dans l'échantillon de la Chine. De plus, l'effet des variables indépendantes sur la propension à acheter des AGM était invariant pour tous les aliments en Roumanie, mais distinctement différent entre les aliments en Chine, probablement en raison de l'enrichissement nutritionnel déclaré (vitamine A) du riz génétiquement modifié.     

Endowment Origin,Demographic Effects,and Individual Preferences in Contests

In modern firms the use of contests as an incentive device is ubiquitous. Nonetheless, experimental research shows that in the laboratory subjects routinely make suboptimal decisions in contests even to the extent of making negative returns. The purpose of this study is to investigate how earning the endowment, demographic differences, and individual preferences impact behavior in contests. To this end, we conduct a laboratory experiment in which subjects expend costly resources (bids) to attain an award (prize). In line with other laboratory studies of contests, our results show that subjects overbid relative to theoretical predictions and incur substantial losses as a result. Making subjects earn their initial resource endowments mitigates overbidding and thus increases efficiency. Overbidding is linked to gender, with women bidding higher than men and having lower average earnings. Other demographic information, such as religiosity, and individual preferences, such as preferences toward winning and risk, also influence behavior in contests.     

Acquisition of Additional Equity Capital by Small Firms – Findings from the National Survey of Small Business Finances

While the importance of venture capital to the growth of small firms has been widely discussed during the past decade, little is known about the acquisition of additional equity capital, especially internal equity capital, by the majority of small firms in the U.S. This paper utilizes the information collected in the Federal Reserve Board’s 1993 and 1998 Small Business Finance Surveys to investigate the acquisition of additional equity capital by small firms. While the importance of public issue markets and venture capital investment in promoting the growth of small dynamic firms cannot be denied, the importance of external equity capital seems to be overstated. Only a very small number of small firms acquired additional external equity capital. It is the internal equity capital, not external, equity, that is one of the major financing sources for most small firms. We found that younger, lower quality firms were more likely to acquire additional internal equity capital than other firms. There appeared to be a “pecking order” of borrowing from internal sources to traditional lenders to non-traditional lenders. In addition, internal equity capital and debt acquired from traditional and non-traditional lenders appeared to be complementary financial resources.     

Cost-effectiveness of telaprevir in combination with pegylated interferon alpha and ribavirin in treatment-experienced chronic hepatitis C genotype 1 patients

Background:

Telaprevir (TVR,T) and boceprevir (BOC,B) are direct-acting antivirals (DAAs) used for the treatment of chronic genotype 1 hepatitis C virus (HCV) infection. This analysis evaluated the cost-effectiveness of TVR combined with pegylated interferon (Peg-IFN) alfa-2a plus ribavirin (RBV) compared with Peg-IFN alfa-2a and RBV (PR) alone or BOC plus Peg-IFN alfa-2b and RBV in treatment-experienced patients.

Methods:

A Markov cohort model of chronic genotype 1 HCV disease progression reflected the pathway of experienced patients retreated with DAA therapy. The population was stratified by previous response to treatment (i.e., previous relapsers, partial responders, and null responders). Sustained virologic response (SVR) rates were derived from a mixed-treatment comparison that included results from separate Phase III trials of TVR and BOC. Incremental cost per life year (LY) gained and quality-adjusted-life-year (QALY) gained were computed at lifetime, adopting the NHS perspective. Costs and health outcomes were discounted at 3.5%. Uncertainty was assessed using deterministic and probabilistic sensitivity analyses. Sub-group analyses were carried out by interleukin (IL)-28B genotype.

Results:

Higher costs and improved outcomes were associated with T/PR relative to PR alone for all experienced patients (ICER of £6079). T/PR was cost-effective for each sub-group population with high SVR advantage in relapsers (ICER of £2658 vs £7593 and £20,875 for partial and null responders). T/PR remained cost-effective regardless of IL-28B sub-type. Compared to B/PR, T/PR prolonged QALYs by 0.57 and reduced lifetime costs by £13,960 for relapsers. For partial responders T/PR was less costly but less efficacious than B/PR, equating to an ICER of £128,117 per QALY gained.

Limitations:

No head-to-head trial provides direct evidence of better efficacy of T/PR vs B/PR.

Conclusion:

T/PR is cost-effective compared with PR alone in experienced patients regardless of treatment history and IL-28B genotype. Compared to B/PR, T/PR is always cost-saving but only more effective in relapsers.     

An analysis of the implications of discontinued operations for continuing income

We examine the extent to which changes in the accounting for discontinued operations affects the usefulness of disaggregated income components in predicting an entity’s future continuing income. Our study is motivated by the joint FASB/IASB convergence project which seeks to define the scope of transactions reported in discontinued operations. To examine our question, we compare the properties of continuing income and discontinued operations reported under SFAS 144 and APB 30, where APB 30 closely parallels IFRS 5. We find that the broader scope of the rule under SFAS 144 results in more persistent continuing income among firms reporting discontinued operations, and that this is concentrated among single-segment firms, which previously were less likely to fall within the scope of APB 30. Because we find no evidence of increased opportunism, we conclude that the broader scope of the rule results in a finer partitioning of recurring and nonrecurring income. Overall, our results support the broader scope of discontinued operations.     

The Productivity Impact of IT Deployment: An Empirical Evaluation of ATM Introduction

The term 'IT paradox' has been widely used to describe the apparent failure of much economic research to discover significant productivity gains associated with IT investment. In part this has been ascribed to measurement problems associated with both IT inputs and with outputs in IT-intensive industries. The current paper seeks to circumvent these difficulties by taking the ATM as a clearly defined embodied IT application and then using anaugmented production function approach to isolate its productivity effectsacross a sample of UK building societies, over the period of the ATM'sdiffusion. The paper finds no support for the 'IT paradox' and reports large robust and statistically significant productivity gains associated with ATM introduction.     

Employee Motivation and Organizational Commitment: A Comparison of Tipped and Nontipped Restaurant Employees

This study explores motivational and organizational commitment factors of tipped and nontipped restaurant employees when differentiated by gender. The data collected from employees of a nationally-known, branded restaurant chain was analyzed using the ANOVA procedure in an effort to determine if significant differences existed between the tipped and nontipped employees relative to their level of motivation and organizational commitment. The results show that limited differences do exist for certain motivational factors and organizational commitment factors when employees were differentiated by tipped versus nontipped employee status and by gender. The study concludes by offering management implications and suggestions for future research relative to implementing operational systems, policies, and procedures that attend to restaurant employee classification difference as well as gender preference.