Impacts of intermediate trade on sector structure

Structural changes, i.e. long-run changes in the agriculture-manufacturing-services-structure, are a key property of growth and development processes with massive impacts on economy and society and are part of actual debates regarding policy in developing and developed economies. While traditional literature has attempted to explain structural changes by using autarkic models, recent literature has emphasised the importance of deriving theories of structural change using open economy settings. We elaborate on the impacts of intermediate trade on sector structure. In particular, we study how import of intermediate products, which is increasingly feasible due to improvements in transport technology and political integration, affects sector structure in a multi-sector growth model with capital accumulation. This topic has not been studied in the previous literature on structural change in open economies, despite the fact that intermediate imports and capital accumulation are central aspects of modern developing and developed economies. We show that the impacts of intermediate trade on sector structure depend on three factors: productivity gains from trade, specialisation in international trade and development stage. Depending on the constellation of these factors, intermediate trade may accelerate, decelerate or have no effect on structural change. Thus, the effects of intermediate trade may vary strongly across countries.     

Scoring More After Service Failures: Why Do Customers Overclaim?

ABSTRACT

More and more customers attempt to claim what they can, rather than what they are offered by the service firm after service failures. The present article empirically investigates the role of situational characteristics in triggering the intention to overclaim through a mediating process of customer's cognitive and emotional responses to the service failure. The model goes beyond predicting the likelihood of overclaiming behavior and offers some insights related to the magnitude or the extent of such claims. The results indicate that cognitive and affective drivers of overclaiming behavior have different impacts on the magnitude or the extent of such claims.     

Economic Calculation: Private Property or Several Control?

Abstract

As the centenary of the 1917 Russian revolution approaches, it is worth reviewing the past 100 years’ discussion amongst economists on the possibility—or otherwise—of economic planning under socialism. The socialist calculation debate is of fundamental importance, not merely as a specialist application of economic ideas, but as an investigation of the foundations of economic activity. Every economic action is premised upon calculation, every choice depends upon an assessment of the costs and benefits of each alternative between which the agent must choose. The view of that choice and its attendant calculation is constitutive of the schools of thought—Marxian, neoclassical and Austrian—which have contributed to the debate. An understanding of the calculation debate is therefore required to understand how these paradigms stand in relation to each other. This article addresses one aspect of that debate—the claim by Austrian economists that socialism is impossible because the absence of private property in the means of production precludes economic calculation. The article suggests that several control rather than private property is required for economic calculation, and that several control is consistent with public ownership of the means of production. The Austrian argument on this point, therefore, is without force.     

Do Alternative Real Estate Investment Vehicles Add Value to REITs? Evidence from German Open-ended Property Funds

Besides the more commonly used REITs, German investors can also invest in a lesser-known real estate vehicle, Open-ended Property Funds. OPFs are considered a compromise between listed and direct real estate investments. OPF fund managers generally provide daily (perfect) liquidity. However, if liquidity falls below 5%, share redemptions in these funds can be temporarily suspended for a period of up to two years. During this time, investors will only be able to sell shares on the secondary market (exchange), and are thus subject to significant liquidity risk. The objective of this paper is to analyze whether OPFs add value to investor portfolios above that provided by REITs. We show that OPFs have a diversification advantage over REITs in low-risk portfolios, despite their larger potential liquidity risk. REIT liquidity is comparable to that of ordinary common stock, but OPFs exhibit an average initial discount to funds’ NAV of about 6% when share redemptions are temporarily suspended. However, in the long-run, this potential redemption suspension does not negatively influence OPF performance (in case OPFs reopen again). This makes OPFs an attractive investment alternative to REITs for investors who have a high level of risk aversion and a long-term investment horizon, such as endowments, insurance companies, and pension funds.     

Multilevel dual approach for pricing American style derivatives

In this article we propose a novel approach to reduce the computational complexity of the dual method for pricing American options. We consider a sequence of martingales that converges to a given target martingale and decompose the original dual representation into a sum of representations that correspond to different levels of approximation to the target martingale. By next replacing in each representation true conditional expectations with their Monte Carlo estimates, we arrive at what one may call a multilevel dual Monte Carlo algorithm. The analysis of this algorithm reveals that the computational complexity of getting the corresponding target upper bound, due to the target martingale, can be significantly reduced. In particular, it turns out that using our new approach, we may construct a multilevel version of the well-known nested Monte Carlo algorithm of Andersen and Broadie (Manag. Sci. 50:1222–1234, 2004) that is, regarding complexity, virtually equivalent to a non-nested algorithm. The performance of this multilevel algorithm is illustrated by a numerical example.     

Buyer investment, export variety, and intrafirm trade

This paper studies a model of buyer investment and its effect on the variety and vertical structure of international trade. A distinction is made between two types of buyer investment: “Flexible” and “specific”, which differ in the ability of a buyer to match with a seller. The interaction of buyer investment with the entry and pricing incentives of suppliers are analyzed. It is shown that (i) there can be multiple equilibria in the variety of products traded, and (ii) less product variety is associated with more intrafirm trade. The possibility of multiple equilibria is consistent with the observation that some similar economies, such as Taiwan and South Korea, differ substantially in their export varieties to the U.S. A cross-country empirical analysis confirms the negative correlation between export variety and intrafirm trade.     

Commodifying the Commodifiers: The Impact of Procurement on Management Knowledge

Current conceptualizations of the commodification of management knowledge prioritize the agency of knowledge producers, such as consultancies, but downplay the role of other actors such as intermediaries. Using a qualitative multi‐method study of the role of procurement in sourcing consultancy knowledge, we demonstrate how intermediaries also commodify management knowledge, thereby limiting the exchange value of that knowledge. Through our analysis we develop a more sophisticated model of the processes and consequences of knowledge commodification. This model clarifies and extends prior research by highlighting the role of commensuration, comparison and valuation, as well as the related tactics that consultants and client managers use to resist procurement's attempts to commodify management knowledge.     

Collaborative Marketing in a Regional Destination: Evidence from Central Florida

This paper aims to explore a collaborative approach to regional destination marketing. Research questions were constructed for empirical data collection via documentary analysis and semistructured interviews with senior executives of destination marketing organizations (DMOs) in the Central Florida region. The research findings suggest that collaboration among DMOs is beneficial in terms of cost reduction and market penetration. Several issues emerge as inhibiting factors to their collaborative destination marketing efforts. Discussions and implications are provided both from a theoretical and practical perspective on the basis of the findings of the study. Copyright © 2012 John Wiley & Sons, Ltd.