The Role of Knowhow Acquisition in the Formation and Duration of Joint Ventures

We analyze the role of knowhow acquisition in the formationand duration of joint ventures. Two parties become partnersin a joint venture to benefit from each other’s knowhow.Joint operations provide each party with the opportunity toacquire part of its partner’s knowhow. A party’sincreased knowhow provides the impetus for the dissolution ofthe joint venture. We characterize the conditions under whichdissolution takes place, identify the party that buys out itspartner, determine the time to dissolution, establish its comparativestatics, and examine the implications of knowledge acquisitionfor the desirability of joint venture formation. (JEL code:G34)     

Intraday Value at Risk (IVaR) using tick-by-tick data with application to the Toronto Stock Exchange

This paper investigates the use of tick-by-tick data for intraday market risk measurement. We propose a method to compute an Intraday Value at Risk based on irregularly spaced high-frequency data and an intraday Monte Carlo simulation. A log-ACD–ARMA–EGARCH model is used to specify the joint density of the marked point process of durations and high-frequency returns. We apply our methodology to transaction data for three stocks actively traded on the Toronto Stock Exchange. Compared to traditional techniques applied to intraday data, our methodology has two main advantages. First, our risk measure has a higher informational content as it takes into account all observations. On the total risk measure, our method allows for distinguishing the effect of random trade durations from the effect of random returns, and for analyzing the interaction between these factors. Thus, we find that the information contained in the time between transactions is relevant to risk analysis, which is consistent with predictions from asymmetric-information models in the market microstructure literature. Second, once the model has been estimated, the IVaR can be computed by any trader for any time horizon based on the same information and with no need of sampling the data and estimating the model again when the horizon changes. Backtesting results show that our approach constitutes reliable means of measuring intraday risk for traders who are very active in the market.     

Price competition during and after promotions

We provide a framework for setting regular prices and using promotional discounts in a duopoly where long‐term promotional effects are present and the firms' pricing and promotional strategies are common knowledge (e.g., as in online markets). We show that at equilibrium, the two firms may not promote and instead adopt an Everyday Low Price (EDLP) strategy. Consumers' tendency to stockpile promoted products, the level of brand loyalty and product differentiation, and the possibility of a postpromotional sales increase critically influence regular prices, price discount rates, and profits. Under some conditions consumer stockpiling intensifies promotional competition and reduces firms' profits while the possibility of attracting new consumers reduces the need to heavily promote and ensures better profits. Managerial implications are discussed. Copyright © 2007 ASAC. Published by John Wiley & Sons, Ltd.     

Decentralization and growth: what if the cross-jurisdiction approach had met a dead end?

The relationship between decentralization and economic growth is generally studied from a perspective stressing universal or quasi-universal regularities across jurisdictions. That approach has generated many insights but seems to reach its limits. The paper explains why it allows contrasting positions with regard to the benefits of decentralization even among proponents of free and competitive markets. And it seems from the empirical literature that no robust and economically significant cross-jurisdiction relation between decentralization and economic performance or growth, except perhaps their independence, has been found. The absence of a relation valid across jurisdictions, however, does not entail the absence of relations specific to each. When jurisdiction specificity is very strong, it is normally difficult to say if there is a relation between observable decentralization arrangements in a jurisdiction and its observable economic performance. However, this may be different under particular circumstances reflecting disequilibrium. Episodes of growth acceleration, when they follow persistent underperformance and include changes in decentralization arrangements, may provide some empirical support to the claim that the relation exists.     

Hinterland transportation in Europe: Combined transport versus road transport

The dominance of road for hinterland services could be challenged by using rail-road or waterway-road transport because of costs, congestion and growing environmental constraints. A common dynamic that is very favorable to the development of combined transport is shared among the actors of the transport chain but with different starting positions considering the ports of the Northern Range.But combined transport must still demonstrate that it can compete with road transport. Road transport and combined transport are not directly comparable because they do not offer the same physical transport service. The organizational patterns of road and combined transport are investigated. The example of hinterland services to and from the port of Le Havre to the Paris region is a particularly interesting case because of the very short distance. It is shown that the competitiveness of combined transport in terms of price varies greatly according to the way road transport it competes with is organized and that the commercial policy of combined transport operators plays a key role for explaining this competitiveness. Additional services such as additional dwelling times and specific custom advantages are paramount of importance to encourage the shift from road transport to combined transport.     

Active ageing in developing countries? – trip generation and tour complexity of older people in Metro Manila

There is by now quite a substantial body of literature discussing the impact of an ageing population in developed countries on travel needs and required changes to transport policy. As many newly developed and developing countries are following demographic trends of “first world” countries, but offset by some decades, the problem is, however, not limited to the industrialised nations. The focus of this paper is on Metro Manila and analyses travel patterns by those aged 60 or over. Trip frequency and tour complexity are analysed with ordered probit regression, separating the effects of socio-demographic characteristics as well as land-use patterns. The results are compared to observations made for cities in developed countries, in particular London as an example for a city in a first world country. We show that there is a more pronounced decrease in total trips made with increasing age in Manila. However, analysing for specific trip purposes we find, similarly to trends in developed countries, that the number of recreational trips is fairly constant in all age groups. Recreational activities also seem to take more time per day than average for younger old, possibly indicating the advent of similar active ageing trends as in industrialised nations. The paper concludes by discussing some implications given future economic trends and advocates that better datasets from developing and newly developed countries are required for urban planning in developing countries.     

The unpredicted rise of motorcycles: A cost benefit analysis

This article examines the consequences, for Paris, of the increase in two-wheel motor vehicle (2WMV) traffic (measured in vehicle/km). Our study reveals that, between 2000 and 2007, the subway's (Métro) share in total inner-Paris travel increased by 13.6%, the RER's share by 10.3% and the SNCF's share by 20.5%. These three means of transport account for 58% of daily travel. On the other hand, the bus share has decreased by 16% and that of cars by 23.7%. Private motor vehicles represent 37.3% of total travel. Looking at road traffic, where public transport (buses) and private motor transport compete for the use of limited road space, private motor vehicles account for 91.5% and public transport 8.5% of total travel.The 2WMV share in Paris traffic increased by 36% between 2000 and 2007, with 2WMVs now accounting for a share twice as large as that of buses. A survey has shown that 100 million additional passenger kilometres were made by 2WMV in 2007 compared to 2000. 53% of this increase comes from people shifting to 2WMV from public transport and 26.5% from private cars. The remaining 20% is attributable to the increased use of 2WMVs by those already owning such vehicles in 2000.Is the growth in the share of 2WMV traffic in Paris beneficial to the community? This shift in the means of transport generates time savings of €293 million and increases owners' vehicle usage costs by €49 million. The cost of accidents is increased by €49 million and the negative consequences in terms of pollution are estimated at €22.6 million. The welfare impact of the government revenue change is negative and equal to €4.7 million. In total, the gain for the community is therefore around €168 million. Accident costs are the key issue. The fact that there are on average 21 2WMV fatalities in Paris (average 2006–2007) for a means of transport accounting for 16% of passenger/km made every day in Paris offers a striking contrast to the 6 (average 2006–2007) fatalities concerning cyclists which account for a mere 0.1% of trips. The massive shift to 2WMV has taken place without any public policy support. Public policy could easily further improve the 2WMV cost-benefit balance by taking measures that would decrease the number of accidents.     

Did foreign exchange holding influence growth performance during the global financial crisis?

In a context of increased foreign exchange reserves holding from emerging and developing countries, this paper investigates the diminishing return of reserves holding assumption over the most severe phase of the global financial crisis (2008Q1–2010Q4). Relying on a Panel Smooth Transition Regression model, we highlight the differential effect of the accumulation of foreign exchange reserves for a set of financial vulnerabilities variables. In a specific manner, although reserves accumulation is effective above a critical threshold to cope with vulnerabilities related to the financial channel, we show that it becomes less effective beyond a certain threshold for domestic bank vulnerabilities. Our results are robust to alternative specifications.