The health national project: A progress analysis 2006–2007

The course of realization of the most important measures foreseen by the Health National Project in 2006–2007 is analyzed in this article. Key problems that appeared in the national project are shown, and approaches to their solution are formulated.     

Towards an economic and monetary union

One of the most important results of the Paris Summit of the nine EEC-members was the decision taken to establish a European Monetary Union until April 1, 1973. Will the Economic Union be now approached more rapidly than in the past?     

Are there economies of scale in underwriting fees? Evidence of rising external financing costs

This study examines the behavior of spreads paid in firm underwrittenseasoned common stock offerings and straight bond offerings.Estimates indicate that up to 85% of the spread is variablecost and that the marginal spread is rising. Further, offeringsthat are likely to require greater underwriting services encounterhigher marginal spreads. These findings are consistent withthere being a family of U-shaped spreads, with lower qualityofferings priced on higher spreads, unlike the economies ofscale view of spreads. They agree with the views that underwritersprovide valuable services and that the marginal cost of externalfinance is rising.     

Price-Fixing and Shareholder Returns: An Empirical Study

This paper examines the market reaction to three different events related to allegations of price-fixing: the initial charges, the firm's plea, and the resolution of the case. Negative, risk-adjusted shareholder returns are associated with the initial charge of price-fixing, while mixed results are observed during the two days immediately after the plea. The ultimate resolution of the case appears to be anticipated by the market. The overall decline in shareholder wealth from all three events combined is about 5 percent. These results suggest that shareholders are at least partial beneficiaries of price-fixing and that the presumption of an agency problem may be incorrect.     

Designing an optimal contest

The paper brings a mechanism design perspective to the study of contests. We consider the problem of selecting a contest success function when the contest designer may also value the prize. We show that any equilibrium outcome that can be achieved by a concave increasing contest success function can be replicated by a linear contest success function. An expected utility maximizing designer should employ a linear homogeneous contest success function. We explicitly derive the optimal contest for a risk-neutral designer and present comparative statics results. Tullock's contest is optimal only when the designer's valuation for the prize is low.     

Get Ready for Innovation by Invasion

From many years of field research in West Germany and the United States, and especially from a recent study of relatively mature firms in Ohio, Gerhard Mensch has become aware of the disruption caused by the invasion of industries by new technologies from the outside. He sees the frequency of these invasions increasing in coming years for reasons that go beyond technological matters to the pressures for change coming from the capital markets. In this Perspective , he suggests the invasions can be countered and the capital markets satisfied by giving a more prominent role to the innovation manager in the strategy development process.