The price normalization problem in imperfect competition and the objective of the firm

Summary. General equilibrium models of oligopolistic competition give rise to relative prices only without determining the price level. It is well known that the choice of a numéraire or, more generally, of a normalization rule converting relative prices into absolute prices entails drastic consequences for the resulting set of Nash equilibria when firms are assumed to maximize profits. This is due to the fact that changing the price normalization amounts to altering the objective functions of the firms. Clearly, the objective of a firm must not be based on price normalization rules void of any economic content. In this paper we propose a definition of the objective of a firm, called maximization of shareholders' real wealth, which takes shareholders' demand explicitly into account. This objective depends on relative prices only. Real wealth maxima are shown to exist under certain conditions. Moreover, we consider an oligopolistic market and prove the existence of a Nash equilibrium in which each firm maximizes the real wealth of its shareholders. Received: July 10, 1997; revised version: July 27, 1998     

On the welfare costs of misspecified monetary policy objectives

This paper quantifies the effects on welfare of misspecified monetary policy objectives in a stylized DSGE model. We show that using inappropriate objectives generates relatively large welfare costs. When expressed in terms of ‘consumption equivalent’ units, these costs correspond to permanent decreases in steady-state consumption of up to two percent. The latter are generated by both the inappropriate choice of weights and the omission of variables. In particular, it is costly to assume an interest-rate smoothing incentive for central bankers when it is not socially optimal to do so. Finally, a parameter uncertainty decomposition indicates that uncertainty about the properties of markup shocks gives rise to the largest welfare costs.     

The Domains of Undergraduate International Business and International Management Courses in Accredited Schools of Business

ABSTRACT

This study compared undergraduate international business and international management course syllabi from 190 management departments at accredited U.S. business schools. Comparisons revealed considerable overlap in topic areas in the two courses. The findings indicate the need for greater domain clarity and differentiation in objectives, topic areas covered, and textbooks used. Domain clarification could lead to more truthful representation of the two courses, better training and disciplinary grounding of course instructors, more appropriate hosting of the courses in business school departments, and enhanced skill-sets among students in these courses. Finally, clear domain definitions are necessary for reliability and validity in international business research.     

The relationship between technology adoption and strategy in business-to-business markets : The case of e-commerce

Firms have been traditionally advised to adopt information and communication technologies (ICT) to support the achievement of existing business objectives. However, entry into business-to-business e-commerce may require the concurrent adoption of new business strategies. This paper argues, therefore, that ICT analysis needs to be considered at the same time and at the same strategic level, as internal, competitor and market analysis. This is because the source of the competitive advantage brought by ICT has changed, to be largely obtained through increase in customers' perceived value. The literature presents a confused picture of the likely consequences to a firm of its adoption of e-commerce. This paper concludes that any such adoption must be evaluated in the environment of the individual firm. A multidimensional analytical framework, taking a combined informational and marketing perspective, is presented to assist with such evaluations.     

Convergence of interest rate pass-through in a wider euro zone?

This study investigates interest rate pass-through convergence for the eight Central and Eastern European countries (CEECs) that joined the European Union. Based on a unifying empirical pass-through model that allows for thresholds, asymmetric adjustment, and structural changes, we find that the pass-through in many CEECs has become faster over time and is generally more complete than in the euro zone. We find evidence for convergence across CEECs with market concentration, bank health, foreign bank participation and monetary policy regime as conditioning factors. No convergence of the CEEC pass-through is found vis-à-vis the heterogeneous euro zone.     

Investment and technological choice in a right-to-manage model

We analyze the interactions between investment and local wage bargaining in a putty-clay model where the investment decision commits the firm to a particular capital intensity. This technological precommitment is used strategically in order to manipulate the bargaining outcome. We show that this strategic behavior induces a nonmonotonic relationship between the capital and labor demands of the firm and most of its environmental parameters (e.g., the bargaining power of the union, its minimum wage requirement, the capital cost). The results we obtain in our putty-clay framework thus contradict several conclusions of the standard literature on wage bargaining and investment.     

The common external tariff of a customs union: Alternative approaches

The most prominent exception to the cardinal ‘most favoured nation’ principle of the General Agreement on Tariffs and Trade (GATT) of 1947 is in its Article XXIV relating to Customs Unions (CUs) and Free Trade Areas (FTAs). This article required, first, the general incidence of the duties and regulations of commerce imposed by members of the CU with respect to trade with non-members shall not on the whole be higher or more restrictive than those that were applicable prior to the formation of CU or FTA, and, second, that substantially all the trade among members be free. Neither requirement was very operational, because the phrases ‘general incidence’ and ‘substantially all’ being difficult legal concepts to apply. The agreement of 1994 establishing the World Trade Organization (WTO) has made ‘general incidence’ precise by defining it import-weighted average of height of barriers but without offering any rationale for the definition. Now that preferential trading arrangements such as FTAs are proliferating, reform of Article XXIV is of importance. This paper describes alternative approaches to the central question of common external tariffs of a CU. Taking off from the work of Kemp and Wan who showed the existence of a common external tariff of CU that keeps the welfare of non-members unchanged while revising that of the CU as compared to the situation prior to the formation of CU, it characterizes such a tariff structure for two leading benchmark examples as consumption-weighted average of pre-union tariffs and subsidies in the member countries.     

The impact of introductory accounting courses on student perceptions about the purpose of accounting information and the objectives of business: A comparison of the UK and Japan

This paper is concerned with the impact of introductory financial accounting courses on student perceptions of business objectives. The paper reports the results of a questionnaire survey of UK and Japanese university students which investigated their views at the start and end of an introductory financial accounting module. The views of Japanese students, in comparison with those from the UK, are of particular interest given evidence in the literature that traditional “social market” traditions in Japan are being influenced by Anglo-American “stock market” values. Our results are consistent with such a phenomenon in that Japanese students’ values regarding business objectives show significant changes that are not mirrored by changes in the perceptions of their UK counterparts. We suggest that accounting education is acting as a conduit for views more commonly held in Anglo-American societies.     

企业工会职能创新浅析

企业工会的职能,除了在内容上有所创新外,在实现方式上也有创新的必要和可能。依靠信息化手段将彻底的改变工会的各种职能,可以节省员工劳动,使员工便捷的接受教育,使员工的满意度得到提高,有利于维护员工权利。     

Union security rights at the polls: A call for modeling right-to-work voting

From 1944 to 1986, 19 states held 27 referendums on right-to-work legislation, with 22.5 million people voting on the proposals. Despite its prominence as a public issue, most research on right-to-work laws focuses on their industrial relations impacts, and not on employees’ individual rights to refrain from joining unions or those same employees’ responsibilities to support their bargaining unit representative. Nor has there been any research on what citizen groups determine those rights and responsibilities in a right-to-work referendum. This study explores a potential operational model of anti-right-to-work voting with a multiple regression analysis of Missouri’s 1978 right-to-work election results, and hopes to serve as a stimulus to additional research on these particular dimensions of the right-to-work issue.