Optimal selling mechanisms for multiproduct monopolists: incentive compatibility in the presence of budget constraints

We analyze the nonlinear pricing problem faced by an incomplete information monopolist operating in a market populated by agents with budget constraints. We show that if other goods are available and if the monopolist's goods are nonessential relative to other goods, then there exists an optimal, individually rational, and incentive compatible selling mechanism for the monopolist (Theorem 1). Moreover, we show that a solution to all such nonlinear pricing problems exists if and only if the monopolist's goods are nonessential (Theorem 2). In the absence of nonessentiality, we show that if the monopolist's profit function is independent of quantity (e.g., if all costs are fixed), then an optimal selling mechanism exists (Theorem 3). Finally, we show that if there is reporting (of types by agents) and partial recognition of types (by the monopolist), then an optimal selling mechanism exists, even in the absence of nonessentiality, provided agents' utility functions are affine and continuous in goods (Theorem 4).     

A Text Mining-Based Review of Cause-Related Marketing Literature

Social networking sites (SNS) have challenged ethical issues about users’ information security and privacy. SNS users are concerned about their privacy and need to control the information they share and its use. This paper examines the security of SNS by taking a look at the influence of users’ perceived control of information over their information-sharing behaviors. Employing an empirical study, this paper demonstrates the importance of perceived control in SNS users’ information-sharing behaviors. Specifically, perceived control has been found to be negatively related to perceived privacy risk and attitude toward information sharing, which in turn has an impact on their information-sharing behaviors. In addition, gender has been shown to be an important factor that moderates the influences of both perceived control and perceived privacy risk on SNS users’ attitudes toward information sharing. Theoretical and practical implications are discussed.     

Spend as I say,not as I do: Children,families and household consumption in different socio‐economic contexts

This article aims at contributing to a body of work about children and families by exploring the importance of socio‐economic context and social capital for understanding the ways in which money is perceived, obtained and used by children. Alleged contrasts in terms of money management, consumption priorities and postponement of gratification, especially among middle and working classes, have already been debated. It seems thus relevant to investigate if these presumable contrasts apply to children and why. Do children from different socio‐economic contexts reveal the traits that have been attributed to their households? To this end, a mixed methods research project was developed involving 245 children attending different primary schools in Portugal—one private school targeted at upper class children and one state‐sponsored school located in a working‐class area. The results revealed significant differences by school and household typology.     

Strategic decisions on bilateral bidding behavior: evidence from a wholesale electricity market

This article analyzes the strategic bilateral bidding behavior in the Spanish electricity wholesale market (OMEL). The collection of data includes information regarding weekly averages of spot prices, the quantity bid in the wholesale market, the quantities purchased in the wholesale market and sold in the open market, and the behavior of conduct parameters for the period from January 2002 to April 2007 for the four largest firms of the Spanish electricity market: Endesa, Iberdrola, Unión Fenosa and Hidrocantábrico. This article employs the New Empirical Industrial Organization approach. The empirical analysis was based on the autoregressive distributed lag approach to cointegration and on the Toda–Yamamoto Granger causality tests to validate the standard version of the theoretical formulation of the standard Cournot model, and its theoretical extension, to encompass the hypothesis of the presence of bid interdependence for electricity quantities sold and bought in the Spanish electricity wholesale market. The results of cointegration and causality analysis reinforce the empirical results of the extended Cournot model with the inclusion of the two main bidding variables that solved the optimization problem of profit maximization for each of the four firms analyzed.     

Competition in the Portuguese economy: insights from a profit elasticity approach

The article uses the elasticity of profits to marginal costs, as in Boone (Econ J 111:1245–1261, 2008b), to measure the degree of competition in the Portuguese economy in a period characterised by the reallocation of resources towards the non-tradable sector and the accumulation of macroeconomic imbalances. Using firm-level data for the period 2000–2009, we find that there is lower competition intensity in the non-tradable sector. The least competitive markets within this sector lay in professional services, network industries and segments of retail trade. We also find that reductions in competition intensity are relatively widespread in the economy, but in terms of sales, gross value added and employment they are more substantial in the non-tradable sector. Results suggest that some network industries and other services exhibit low and a declining competition intensity in the period under analysis. In addition, the article discusses the coherence of the profit elasticity with classic indicators of market power, such as the Herfindahl–Hirschman index and the price-cost margin, and find that in more than half of the markets there is an agreement in the dynamics of competition intensity.     

Global and Extreme Dependence Between Investor Sentiment and Stock Returns in European Markets

The authors investigate the global and extreme dependence structure between investor sentiment and stock returns in 7 European stock markets (Belgium, France, Germany, Greece, the Netherlands, Portugal, and the UK), over the period 1985–2015. Global dependence refers to the correlation of changes in sentiment and stock returns over the whole range of these 2 variables, and extreme dependence refers to the local correlation of high (i.e. asymptotic) changes in sentiment and high stock returns. Using copula models and a bootstrap procedure, 6 statistical tests are performed for this purpose. Among the results of the tests, the authors highlight those that provide evidence of contemporaneous lower extreme dependence and contemporaneous upper extreme independence between sentiment and returns. As policy implications, these results suggest that financial stability can be promoted if regulators consider the impact of their decisions on investor sentiment. Also, the results seem to support the arguments in favor of short selling ban during turmoil periods. Finally, overall, the results are relevant for both investors and regulators and reinforce the importance of considering investor sentiment to better understand the behavior of financial markets.     

Open‐shop unions and product market competition

Abstract Evidence on the effect of product market competition on unionized wages is mixed. In this paper we show theoretically that the result may reflect genuine heterogeneity in the response of union wages to product market conditions. For low levels of unionization, union bargaining power may actually be enhanced by market competition, as firms have more to lose when there is a strike. Using recent data from the UK, we explore interactions between the level of industry competition and unionization, and find supporting evidence for this hypothesis.     

Inequality and criminality revisited: further evidence from Brazil

The objective of this study is to shed light on the determinants of criminality rates in Brazil. A panel data model was estimated using Brazilian states’ data. Our main result suggests that income inequality plays an important role in the determination of the crime rate. Furthermore, there are evidence suggesting that both unemployment and urbanization rates are positively related to crime. Based on a GMM approach we find the existence of an “inertial effect” on criminality. Besides that, the GMM results show that public security spending is effective in reducing criminality rates. Contrary to the common wisdom, we could not find evidence that poverty increases violent crimes. Finally, we have evidence that income inequality Granger causes crime, but not the reverse.     

EBITDA margin in brazilian companies Variance decomposition and hierarchical effects

This study explores the controversy between the business and academic perspectives regarding earnings before interest, taxes, depreciation, and amortization (EBITDA). Some authors argue that EBITDA is not useful as an indicator, except for comparing companies within the same sector (Assaf Neto, 2003, McClure, 2006, Stumpp, 2000). On the other hand, the business world strongly uses this type of indicator as a tool to support its decisions (Schmalensee, 1985, Moraes, 2005). This difference in opinions has aroused interest in understanding the reasons for its use and has raised questions regarding the usefulness of EBITDA for comparing companies from both the same and different sectors. By applying Hierarchical Linear Modeling (HLM), the main goal of this research is to observe EBITDA behavior across companies selling goods in Brazil, comparing them within the same sector and across different sectors over time. This research allows for the analysis of the reasons why EBITDA patterns occasionally occur. The results show significant variation in EBITDA among companies across the same sector and across companies from different sectors. On the other hand, our results have shown, nevertheless, that the variability among companies from the same sector was the highest one, raising questions on the actual usefulness of this indicator to compare companies from the same sector.     

Periodograms on fiscal illusion: discussing the cycle lengths of public finances in European countries

In this article, we study the duration of public finance cycles in 12 European countries since 1960. We applied periodogram techniques on the levels of fiscal illusion found for these established democracies and tested the statistical significance of the Fourier frequency peaks. Our empirical efforts revealed that most of the cycles in these countries could be characterized as long-term cycles (approximately 30 years), embodying subcycles of approximately 15 years. These findings show that in addition to the commonly studied electoral cycles or real business cycles, our democracies demonstrate extended public finance cycles that extend over various legislative tenures ruled by different political parties.