Incentives for cost misrepresentation in supply chains

This paper investigates sequential manufacturer–retailer price determination and channel performance under possible misrepresentation by one member of its privately known cost. To the standard double marginalization game, we add a preliminary stage where the manufacturer (alternately the retailer) announces its privately known constant marginal cost. We prove that the manufacturer has no incentive to misrepresent its cost, and we give respective sufficient conditions on the demand function for the retailer to overreport and to underreport costs. Depending on the shape of the demand function, opportunistic behavior by the retailer may lower or raise the manufacturer’s profit and channel performance.     

Institutional Determinants of Foreign Direct Investment

In this paper, we contribute to the literature on the determinants of foreign direct investment in developing countries and re‐evaluate the role of the quality of institutions on FDI independently of the general level of development. We implement cross‐section estimations based on a newly available database with unprecedented detail on institutions for a set of 52 countries, as well as panel data estimations based on Fraser Institute's data. Furthermore, we control for the correlation between institutions and GDP per capita and for endogeneity of institutions. Finally, we evaluate whether the similarity of institutions between the host and the origin country raises bilateral FDI. We find that a wide range of institutions, including bureaucracy, corruption, but also information, banking sector and legal institutions, do matter for inward FDI independently of GDP per capita. Interestingly, weak capital concentration and strong employment protection tend to reduce inward FDI. Institutional proximity between the origin and the host country also matters, but we find little impact of institutions in the origin country. These results are encouraging in the sense that efforts towards raising the quality of institutions and making them converge towards those of source countries may help developing countries to receive more FDI, independently of the indirect impact of higher GDP per capita. The orders of magnitude found in the paper are large, meaning that moving from a low level to a high level of institutional quality could have as much impact as suddenly becoming a neighbour of a source country.     

Nonparametric Efficiency Analysis under Price Uncertainty: A First-Order Stochastic Dominance Approach

This paper extends the nonparametric approach to efficiency analysis to deal with uncertainty of input-output prices. We generalize the notion of economic efficiency to derive necessary and sufficient first-order stochastic dominance (FSD) efficiency conditions. Interestingly, the FSD conditions include as limiting cases the traditional conditions for economic efficiency and technical efficiency. Furthermore, we propose empirical tests for these FSD conditions, which require minimal assumptions concerning the preferences of the decision-maker and the statistical distribution of the prices. From operational point of view, the FSD conditions can be tested empirically using standard mathematical programming techniques. An empirical application to the Dutch electricity distribution sector illustrates the approach.     

Intersubjective economics, theory of production, and the transformation problem

The intersubjectivist theory of value (surveyed in Levy [1990, 1994a] and Fullbrook [1994c, Section 4]) is founded on Simone de Beauvoir's conception of reciprocal desire and emphasizes the role of conventions and intersubjectivity in market relations. It treats money and markets as social institutions and argues that a money economy is fundamentally different from a real one. The tool of intersubjective economics is to offer a system for analyzing standard economic phenomena from a vantage point outside the equilibrium paradigm. But paradoxically, while the intersubjectivists developed intersubjective analysis of the firm [Eymard-Duvernay, 1989; Levy, 1994b, 1995c; Biencourt et al., 1994], the original intersubjectivist theory of value to which they refer is conceived in an exchange economy. This paper's aim, then, is to explore and discuss points for reducing the lack of a theory of production in intersubjective and measurement economics. The author benefited from the useful thoughts of Richard Arena [1990] as well as from useful discussions and strong encouragements from Edward Fullbrook and Charles M. A. Clark. Finally, the author benefited from the useful discussions of conference participants, especially Manuel Garcia.     

Revisiting Oligopolistic Reaction: Are Decisions on Foreign Direct Investment Strategic Complements?

Knickerbocker (1973) introduced the notion of oligopolistic reaction to explain why firms follow rivals into foreign markets. We develop a model that incorporates central features of Knickerbocker's story—oligopoly, uncertainty, and risk aversion—to establish the conditions required to generate follow-the-leader behavior. We find that rival foreign investment will make risk-neutral firms less inclined to move abroad once its rivals have done so. We show that Knickerbocker's prediction relies on risk aversion and derive an expression for the minimum amount of risk aversion needed to generate oligopolistic reaction.     

Globalization and the empowerment of talent

Many experts have identified globalization as the new way in which firms organize their activities and the emergence of talent as the new stakeholder in the firm. This paper examines the role of trade integration in the changing nature of the corporation. International trade leads to a ‘war for talent’ which makes it more likely that an organizational equilibrium emerges in the integrated world economy in which control is delegated to lower levels of the firm's hierarchy empowering human capital. Furthermore, trade integration is shown to lead to waves of decentralization and to convergence in corporate cultures across countries.     

How frequent a BEER? Assessing the impact of data frequency on real exchange rate misalignment estimation

This article explores the robustness of Behavioural Equilibrium Exchange Rate models, employed to estimate real effective exchange rate misalignments, to the frequency of the underlying data. It compares misalignments stemming from an annual model, estimated since 1980, and a comparable quarterly model, estimated since 1999. The two sets of estimates are similar. Moreover, the in-sample power of quarterly REER misalignments in explaining subsequent REER developments is higher than that of the annual estimates. This article therefore suggests that the “optimal” frequency of a BEER model depends on whether its resulting estimates are employed for research purposes or for policy-making activities.     

A bibliometric analysis of the scientific literature on Fairtrade labelling

Since its foundation, the Fairtrade movement has attracted the attention of consumers, practitioners, media and scholars. Discussing the role that Fairtrade can play on a global yet locally rooted scale is very complex, as research reports contrasting results about its usefulness and effectiveness. This study examines scientific research on Fairtrade over the last decades by conducting a bibliometric analysis of the literature published on the ISI Web of Knowledge Core Collection, which included 876 papers by 1,293 authors in 432 journals. Results show that despite this being a relatively recent field of study, Fairtrade has been approached from different disciplines with different methodologies and objectives. The structured quantitative study of the literature enabled us to inspect how research has evolved over the years in the light of the changes faced by Fairtrade, to explore its scope in the broader field of the global market, to detect current research schools and perspectives within the network and to identify hitherto unaddressed issues and unconnected subfields.     

Coherent modeling of mortality patterns for age-specific subgroups

Decisions in Economics and Finance - The recent actuarial literature has shown that mortality patterns and trajectories in closely related populations are similar in some respects and that small...     

MIGRATION AND INSTITUTIONS: EXIT AND VOICE (FROM ABROAD)?

A rapidly growing body of research examines the relationship between migration and institutions. Three strands of studies can be distinguished. Some studies focused on the role of domestic and foreign institutions in the decision to migrate. Others were interested by the impact of migration on institutional reforms in migrants' countries of origin. Recent studies focus on how migrants affect social and informal institutions in the destination countries. This survey puts together these three strands of literature with three purposes. First, we offer a short definition and synthetic typology of institutions, which provide a guide to understand several studies we have critically reviewed. Second, our analysis is presented following the analytic framework exit, voice, and loyalty of Hirschman in order to highlight the brain gain phenomenon for developing countries, from an institutional point of view. Third, we review the limited existing work on the very timely topic, whether migrants are harmful or not to institutions in the host countries.