Is it the wage premium that targets worker turnovers?

The literature on FDI shows that there exists a wage premium that multinational enterprises (MNEs) pay to local workers and link this to a technology spillover argument. The MNEs pay higher wages to prevent worker turnovers and technology leakages. Literature relates the wage premium aspect of FDI using worker mobility data and uses worker turnovers and the technology spillover argument. We relate stock options in the FDI context of worker mobility and find in a simplified framework that the turnover of workers would depend on the relative payments of stock options.     

Optimal Organization of Surrogacy Contracts and Underinvestment

We develop a theoretical model of commercial gestational surrogacy in which a childless couple approaches a prospective surrogate, who is willing to gestate for the couple. We use a Principal-Agent framework with continuous effort to argue the following: in presence of limited liability of the surrogate, provision of optimal incentives (under non-contractible effort) is not feasible. Hence, a surrogate facing low outside option and having limited wealth is always found to put in sub-optimal care for the fetus. Put differently, the surrogate cannot be made a residual claimant (cannot be entitled with custody rights of the fetus) and therefore eliciting first best care is never optimal. But this result dramatically changes when the model is cast in discrete effort where inefficiency is likely only when the surrogate faces low outside option whereas we get multiple efficient contracts for higher outside option. Moreover, we see first-best efficient contracts may be implemented even without full transfer of custody rights to the surrogate.

     

Does Tariff Induce Intellectual Property Right Protection and Reduce Incidence of Piracy?

We consider a model with North exporting a copyrighted product to South where there is IPR violation, and South exports a basic good to North. We examine the impact of North's imposition of import tariff on South's monitoring of IPR violation and the incidence of piracy. If South values IPR compliance “lowly”, then tariff imposition do not alter the pre‐tariff no monitoring equilibrium outcome but unambiguously raises the incidence of piracy. If IPR compliance is valued “highly” then tariff either switches the equilibrium outcome from not monitoring to monitoring or increases its rate. However, the incidence of piracy may increase.     

Social media as a destination marketing tool: its use by national tourism organisations

India's protected areas (PAs), especially those designated tiger reserves, are popular tourist destinations, experiencing considerable and growing visitor numbers, but the principles of ecotourism are not well implemented. This paper analyses tourism practice in a sample of popular tiger reserves in India according to four principles of responsible ecotourism: minimisation of environmental impacts, generation of funds for conservation, benefits to local communities, and education of visitors. Evidence demonstrates that few criteria of ecotourism are met in most PAs: tourism imposes significant detrimental impacts, little of the generated revenue is captured, local communities get mostly menial jobs, and visitor education is virtually non-existent with tourism geared mainly towards thrill-seeking. The Indian Forest Service, which manages the PAs, is on the whole unprepared and ill-equipped to plan and implement proper ecotourism practices and faces constant pressure from other actors to increase tourism revenue. Periyar National Park stands out as an exception where innovative approaches involving local communities have brought about a significant positive change. Policy recommendations are offered based on limited, low-impact activities with high participation of local communities which is essential to build local support for conservation that has been historically lacking.     

Do Proprietary Algorithmic Traders Withdraw Liquidity during Market Stress?

We investigate the role of proprietary algorithmic traders in facilitating liquidity in a limit order market. Using order‐level data from the National Stock Exchange of India, we find that proprietary algorithmic traders increase limit order supply following periods of both high short‐term stock‐specific volatility and extreme stock price movement. Even following periods of high marketwide volatility, they do not decrease their supply of liquidity. We define orders from high‐frequency traders as a subclass of orders from proprietary algorithmic traders that are revised in less than three milliseconds. The behavior of high‐frequency trading mimics the behavior of its parent class. This is inconsistent with the theory that fast traders leave the market when stress situations arise, although their limit‐order‐supplying behavior becomes weaker when the increase in short‐term volatility is more informational than transitory. Agency algorithmic traders and nonalgorithmic traders behave opposite to proprietary algorithmic traders by reducing the supply of liquidity during stress situations. The presence of faster traders in the market possibly instills the fear of adverse selection in them. We document that the order imbalance of agency algorithmic traders is positively related to future short‐term returns, whereas the order imbalance of proprietary algorithmic traders is negatively related to future short‐term returns.     

Socio-economic development and software piracy. An empirical assessment

The high rate of software piracy is a growing concern for software developers as well as businesses and governments. It is argued here that the piracy rate is influenced by expected benefits and costs to the pirates. A model is developed using a set of variables that may affect such benefits and costs and hence piracy rate in a country, and tested for a large sample of 53 countries. The results of this paper suggest that the existing socio-economic conditions and the lack of proper institutions in developing and emerging economies may be responsible for high software piracy rates. One may, therefore, infer that the current trends of globalization and socio-economic development may help software piracy in developing countries.     

A simplified test for preference rationality of two-commodity choice

We provide a simplified test to determine if choice data from a two-commodity consumption set satisfies the Generalized Axiom of Revealed Preference (GARP), and thus the preference or utility maximization hypothesis. We construct an algorithm for this test and illustrate its application on experimental choice data. JEL Classification C91, D11, D12 An erratum to this article is available at .     

Productivity paralysis and the complexity problem: Why do centrally planned economies become prematurely gray?

We develop a theory of the Soviet productivity growth slowdown that attributes it to difficulties encountered by systems of central planning as the economy becomes more complex. Shortages become more disruptive as the economy modernizes, forcing the economy to operate at an increasing distance from its production possibility frontier. The model also supports the widely held notion that consumer welfare suffers in Soviet-type economies as consumers' needs become increasingly sophisticated.