D-optimal weighing designs for six objects

For all integers m≥6, we determine the maximum value of det X ^T X, where X is an m×6 (0, 1)-matrix, and exhibit (D-optimal) matrices X for which the maximum occurs. For D-optimal matrices X, the uniqueness of the Gram matrix X ^T X is discussed. Received: May 2000     

Rational Strategic Reasoning: An Unnatural Act?

We review recent literature on competitive reactions and strategic thinking and offer several observations. Evidence is mounting that strategic thinking is an unnatural act, made difficult by natural individual biases and organizational roadblocks. In addition, it is possible that uncertainty about competitive behavior is caused by and contributes to informal and incomplete competitive intelligence. We propose a simple model which suggests a potential path dependency in a firm's intelligence gathering, driven by the inertia of its past decision-making. Such a path dependency can be broken, however, as evidenced by several examples of firms who have overcome barriers to strategic thinking in creative ways. Paradoxically, though, there are circumstances in which competition is overemphasized in decision-making. Research priorities are discussed.     

Gender Comparisons in Strategic Decision-Making: An Empirical Analysis of the Entrepreneurial Strategy Matrix

The strategic decision-making of male and female small businesspersons and entrepreneurs has been investigated in prior research, but the findings are mixed. This article reports on a gender comparison testing of the Entrepreneurial Strategy Matrix, a situational model which suggests strategies for new and ongoing ventures in response to the identification of different levels of venture innovation and risk. A national sample of 184 small firm owers (59 percent male/41 percent female) was tested. Results indicate that there are no significant gender differences in venture innovation/risk situation or in strategies chosen by business owners. Male respondents did indicate a higher overall satisfaction with venture performance than did females.     

Distributional Coalitions,the Industrial Revolution,and the Origins of Economic Growth in Britain

From the late 1600s to the mid 1800s, Britain was able to transform from a divided kingdom with a fragmented, often stagnant economy into a powerful and stable state that simultaneously saw an expansion in the power, wealth, and stability of the central government while encouraging an economic transformation that gradually allowed both industrial technology and liberal commerce to flourish and break out of its mercantilist straitjacket. We explain how rent-seeking elites who might normally have opposed such sweeping transformations promoted institutional changes that, in the long run, expanded the economy and encouraged innovation even at the expense of class interests. In the short run, this meant that rent-seeking in the 18th century was not so much reduced as redirected from local monopolies to state authorities and Parliament. But in the longer run, the process of professionalization made possible greater liberalism in general, even at the expense of general rent-seeking itself. The position of Parliament as a meta-institution for reforming and weakening rent-creating restrictions as needed was pivotal to this process. Ideological changes—particularly the Scottish enlightenment—transformed the terms of the debate but could only be operationalized once interests were aligned so that gainers from industrialization could compensate or overcome traditional interests.     

Urban air pollution progress despite sprawl: The “greening” of the vehicle fleet

Growing cities, featuring more people with higher incomes who live and work in the suburbs and commute by private vehicle, should be a recipe for increased air pollution. Instead, California's major polluted urban areas have experienced sharp improvements in air quality. Technological advance has helped to “green” the average vehicle. Such quality effects have offset the rising quantity of miles driven. This paper uses several vehicle data sets to investigate how California's major cities have enjoyed air pollution gains over the last 20 years.     

Progressive Revenue Sharing in Major League Baseball: The Effect on Player Transfers and Talent Distribution

Major League Baseball’s system of sharing revenue between clubs was altered significantly in 1997. The arrangement progressively redistributes income from the highest toward the lowest revenue-generating clubs. The purpose of the new method was to alleviate growing disparity in revenue generation. However, under the progressive system the lowest revenue producing clubs bear the highest marginal tax rates, and theoretically problems of competitive imbalance may be amplified. Changes in talent distribution are observed by analyzing player mobility; an empirical model of player transfers is developed and tested. Confirmation is obtained that low revenue clubs acted on increased incentives to divest talent.     

Intervention, Corruption and Capture: The Nexus between Enterprises and the State

We study the nexus between enterprises and the state in transition countries, using new enterprise survey data. We examine the quality of governance, state intervention in enterprise decision-making, state benefits to firms, and corruption payments. The quality of governance varies both across countries and across different dimensions of governance within countries. Economic reform improves governance in countries with a low degree of 'state capture' by vested interests, but not in high-capture countries. Despite reform, state intervention in firm decisions continues, but it varies substantially across firms. At the micro level (within a country), there is clear substitution between the degree of state intervention, state benefits to firms, and corruption payments, which is consistent with a bargaining model of politicians and firms. But at the macro level (across countries) these elements are complementary, suggesting that politicians, perhaps under pressure from captor firms, have some control over the scope of regulation and intervention.     

SOME EVIDENCE THAT BANKS USE INTERNAL CAPITAL MARKETS TO LOWER CAPITAL COSTS

To the extent raising external capital is especially costly for banks (as the preceding article suggests), bank managers have incentives to manage their internal cash flow in ways that minimize their need to raise external equity. One way to accomplish this is to establish bank holding companies that set up internal capital markets for the purpose of allocating scarce capital across their various subsidiaries. By “internal capital market” the authors mean a capital budgeting process in which all the lending and investment opportunities of the different subsidiaries are ranked according to their risk-adjusted returns; and all internal capital available for investment is then allocated to the highestranked opportunities until either the capital is exhausted or returns fall below the cost of capital, whichever comes first. As evidence of the operation of internal capital markets in bank holding companies, the authors report the following set of findings from their own recent studies:

• ? For large publicly traded bank holding companies, growth rates in lending are closely tied to the banks' internal cash flow and regulatory capital position.
• ? For the subsidiaries of bank holding companies, what matters most is the capital position and earnings of the holding companies and not of the subsidiaries themselves.
• ? The lending activity of banks affiliated with multiple bank holding companies appears to be less dependent on their own earnings and capital than the lending of unaffiliated banks.

The authors also report that, after being acquired, previously unaffiliated banks increase their lending in local markets. This finding suggests that, contrary to the concerns of critics of bank consolidation, geographic consolidation may make banks more responsive to local lending opportunities.     

Free trade taxation and protectionist taxation

The goal of this paper is to seek new insight regarding international tax policy by recasting it in parallel with the theory of international trade. This is accomplished by defining a free trade taxation regime as one that is consistent with an efficient worldwide allocation of capital, and evaluating within this perspective various aspects of tax policy, such as value-added (axes, integration, income shifting, and the choice of worldwide or territorial system of taxes.Compatibility with free trade is not the only standard against which to judge an international tax system. Nevertheless, as national economies become more integrated the importance of international taxation for the efficient functioning of capital markets will become a central policy issue.