COOPERATIVE MANAGERIAL DELEGATION,R&D AND COLLUSION

Existing literature on managerial delegation indicates that collusive outcomes can be obtained in an oligopoly game through cooperative managerial delegation. In contrast, this paper shows that, if managers are delegated to choose R&D, in addition to choosing production levels, full‐collusive outcomes cannot be achieved through cooperative delegation. Moreover, (i) under cooperative delegation, semi‐collusion always yields lower profit, higher R&D, higher price and lower social welfare than that in the case of competition and (ii) cooperative delegation leads to a higher profit lower R&D, higher price and lower social welfare than the no delegation case, irrespective of product market conduct.     

What Do Farmers Want From Agri‐Environmental Scheme Design? A Choice Experiment Approach

Agri‐environmental schemes (AES) have had a limited effect on European agriculture due to farmers’ reluctance to participate. Information on how farmers react when AES characteristics are modified can be an important input to the design of such policies. This article investigates farmers’ preferences for different design options in a specific AES aimed at encouraging nitrogen fixing crops in marginal dry‐land areas in Spain. We use a choice experiment survey conducted in two regions (Aragón and Andalusia). The analysis employs an error component random parameter logit model allowing for preference heterogeneity and correlation amongst the non‐status quo alternatives. Farmers show a strong preference for maintaining their current management strategies; however, significant savings in cost or increased participation can be obtained by modifying some AES attributes.     

Shared ownership and pricing in a network switch

We observe that many wholesale switches in automated teller machine (ATM) networks are jointly owned by their members and that this tends to occur more frequently when the wholesale industry is highly concentrated. We also observe that network switches are ‘natural monopolies’, their costs being largely fixed and their demand exhibiting substantial network externalities. Motivated by these observations, we model the competition for members between wholesale switches and the role joint ownership can play in attracting members. The model analyzes both the adoption decision (which network a bank chooses to join) and the subsequent pricing of switch and ATM services. We compare competition between two solely owned switches with competition between one solely owned and one jointly owned switch. Our analysis shows that a more concentrated structure results under the latter and that retail prices are higher. This calls into question the leniency of antitrust policy toward jointly owned structures.     

Strategic innovation and technology adoption in an evolving industry

We introduce a racing model with multiple product generations, product innovation, spin-outs, and licensing. Industry conditions and innovation characteristics affect who wins the race and who markets the resulting product. Small firms market their innovations when they pioneer a new generation or improve quality in a young generation and license their innovations in mature generations. If old generation leaders ever market improvements in young generation goods, they do so early on. Leadership in mature generations persists. Tests on the rigid disk drive industry (1977-1997) provide empirical support. The results have implications for antitrust policies and policies governing employee non-compete agreements.     

CEO incentive plans and corporate liquidation policy

To investigate CEOs' incentives to liquidate their firms, we examine the effects of insider ownership and compensation in stock options on 30 voluntary liquidation decisions by industrial firms in the period 1975–1986. We find that liquidation decisions are influenced by CEO incentive plans and increase shareholder value. Firms with more outside board members, smaller market-to-book ratios, and attempts by outsiders to gain control are more likely to be liquidated. Although few top executives of liquidating firms subsequently take comparable jobs, at least 41% of CEOs who downsize are made better off by liquidation.     

Processes of normal inverse Gaussian type

With the aim of modelling key stylized features of observational series from finance and turbulence a number of stochastic processes with normal inverse Gaussian marginals and various types of dependence structures are discussed. Ornstein-Uhlenbeck type processes, superpositions of such processes and stochastic volatility models in one and more dimensions are considered in particular, and some discussion is given of the feasibility of making likelihood inference for these models.     

The economic constitution of the European community: From Rome to Maastricht

The present paper analyzes the changes in the economic constitution of the European Community since its foundation in 1958. In order to identify the various changes, we start by developing a frame of reference. Our proposition is that theconstitutional charter of the European Economic Community (EEC)—the EEC Treaty—came closest to this frame of reference, being an economic constitution for a market system, whereas the subsequentprocess of European integration—including several modifications of the Treaty—was largely based on the introduction of non-market elements. Our argument is that as far as the economic constitution is concerned, the Treaty of Maastricht is dominated by traits which are characteristic of modern welfare states.     

Structural change in the United States: Social accounting estimates for 1982–1988

During the 1980's, extensive structural adjustments took place in the U.S. economy. This paper uses estimates of sectorally detailed social accounting matrices to evaluate the changes in receipt and expenditure patterns, including interindustry linkages, over the 1982–1988 period. Among other effects, our results reveal increasing service orientation, shifts in energy use, and increased import and foreign investment dependence. Detailed evidence on direct and indirect demand linkages indicates large shifts in the composition of government expenditure and private investment, the latter being intensified by declines in the rate of domestic capital formation.We would like to thank Greg Alward for the 1982 IMPLAN input-output data, Norman Bakka for the National Income and Product Account Data, Ken Hanson for helpful suggestions, Mark Planting for 1985 BEA input-output data, Valerie Personick for the activity output data, and two anonymous referees for helpful comments.     

The one-sided Kolmogorov-Smirnov test in signal detection problems with Gaussian white noise

In this paper, we investigate the power of the Kolmogorov-Smirnov test for negativity of signals in signal detection problems with Brownian motion noise. Strict unbiasedness and admissibility are established. Moreover, taking up an approach of Häjek and Sidäk (1967) for the classical Brownian bridge case, we compute the directional derivative of the power function at the hypothesis, thus obtaining the principal direction of alternatives of the test. As an application, in a hazard rates set-up, one-sided Rényi-tests may be adjusted by choosing their weight function such that they are most sensitive against a prescribed type of alternatives. Finally, we give some numerical and simulation results.     

Cartelizing effects of horizontal shareholding interlocks

Some models of industries with horizontal shareholding interlocks are generalized. First, we consider industries where firms exhibit different technologies and more general market demand functions. The cartelizing effects of financial interlocks are examined using both the Lerner index and the Herfindahl–Hirshman index. Furthermore, the model is extended to consider multiproduct oligopolies. We find a compact expression for the Lerner index and study the cartelizing effects of such an industry. Copyright © 2001 John Wiley & Sons, Ltd.