Technological choices and regulation: the case of the Canadian manufacturing sectors

Abstract The economic environment in which Canadian manufacturing firms operate has changed substantially over the last 40 years. Technological changes, new regulations, deregulation, and exogenous economic shocks all have been important aspects of this economic environment. In this article, we show how to include such changes in the economic environment faced by the firms in a behavioural model that includes the investment decision of the firm under uncertainty. Assumptions regarding the expectation formation process and technology are kept minimal. We estimate the effects of innovations such as the free trade agreement, the foreign investment review agency, and the federal environmental policy on the economic decisions of fifteen Canadian manufacturing sectors. JEL Classification: D24
Choix de technologies et réglementation: le cas des secteurs manufacturiers canadiens Au cours des 40 dernières années, l'environnement économique des firmes manufacturières canadiennes s'est grandement transformé. Que ce soit à cause du changement technologique, de la réglementation, de vagues de déréglementation ou de chocs économiques exogènes, les firmes ont dû s'adapter en modifiant leur technologie. Dans cet article, nous montrons comment prendre en compte les changements de l'environnement économique des firmes dans le cadre d'un modèle décisionnel de la firme en incertitude avec investissement. Les hypothèses concernant la technologie et les anticipations sont aussi générales que possible. Nous estimons l'effet qu'ont eu l'accord de libre échange, l'agence de tamisage des investissements étrangers et la politique environnementale fédérale sur les choix de technologies des firmes de quinze secteurs manufacturiers canadiens.     

Asymmetric performance: the market share impact of scale and link alliances in the global auto industry

This study investigates how participating in strategic alliances with rivals affects the relative competitive positions of the partner firms. The paper builds on studies that show significant differences in the outcomes of scale and link alliances. The study argues that the more asymmetric outcomes of link alliances translate into greater changes in the relative market shares of the partner firms, due to unbalanced opportunities for inter‐partner learning and learning by doing. We find support for this argument by examining 135 alliances among competing firms in the global automobile industry, from 1966 to 1995. Copyright © 2004 John Wiley & Sons, Ltd.     

How Does a Development Moratorium Affect Development Timing Choices and Land Values?

This paper investigates how a development moratorium affects choices of development timing and land values in a framework where both the value of developed property evolves stochastically and the development costs are fully irreversible. We assume that a regulator initially announces that land is not allowed to be developed during a finite period of time in the future. A developer, thus, must decide whether to develop land before the timing ordinance is imposed, or after it expires. The development moratorium reduces the developer’s option value from waiting and, thus, accelerates development. We also use simulation analysis to demonstrate how the other factors that relate to the demand and supply conditions of the real estate market affect this accelerating effect.     

The adequacy of asymptotic approximations in the near-integrated autoregressive model with dependent errors

We consider the normalized least squares estimator of the parameter in a nearly integrated first-order autoregressive model with dependent errors. In a first step we consider its asymptotic distribution as well as asymptotic expansion up to order O_p(T⁻¹). We derive a limiting moment generating function which enables us to calculate various distributional quantities by numerical integration. A simulation study is performed to assess the adequacy of the asymptotic distribution when the errors are correlated. We focus our attention on two leading cases: MA(1) errors and AR(1) errors. The asymptotic approximations are shown to be inadequate as the MA root gets close to −1 and as the AR root approaches either −1 or 1. Our theoretical analysis helps to explain and understand the simulation results of Schwert (1989) and DeJong, Nankervis, Savin, and Whiteman (1992) concerning the size and power of Phillips and Perron's (1988) unit root test. A companion paper, Nabeya and Perron (1994), presents alternative asymptotic frameworks in the cases where the usual asymptotic distribution fails to provide an adequate approximation to the finite-sample distribution.     

Employment and Wage Bargaining in an Open Monetary Union

This paper studies alternative patterns of wage bargaining in an open two-country monetary union. Wages are fixed by trade unions for two periods, either at the national or at the monetary union level. It is shown that the best solution with regard to unemployment depends on the nature of externalities and dynamic strategic interactions between the monetary union's countries; namely on the degree of openness of the monetary union, and the differentiation index between national goods.     

The relevance of currency risk in the EMU

We investigate how the elimination of intra-European exchange risk may affect international financial markets using a conditional version of the International CAPM. We estimate the EMU and non-EMU components of aggregate currency risk and document significant exposures to both. The premium for EMU risk is positive and associated with exposure to the French, Italian and Spanish currencies. The premium for non-EMU risk is consistently negative and accounts for most of the aggregate currency premiums. In the 1990s, exposures to EMU risk declined significantly while exposures to non-EMU risk increased. Hence the adoption of the Euro is unlikely to have a large impact on aggregate currency risk premiums.     

Creating the Customer: The Influence of Advertising on Consumer Market Segments – Evidence and Ethics

For over half a century market segments have been considered objective groupings of individuals which marketers identify, understand, and target with advertising messages. The process of market segmentation has, therefore, occupied a position of moral neutrality. An increasingly popular method of segmentation is by consumer personality, with advertisers targeting messages to specific personality types. This paper explores personality segmentation, and presents empirical evidence to support the proposition that personality metrics that are used to assign individuals to segments may, in fact, be manipulable by advertising executions themselves. Quite apart from the implications that this has for the business efficacy of the segmentation process, the ethical implications – particularly as applied to children – are considerable.     

Managers’ Corporate Entrepreneurial Actions and Job Satisfaction

Through the development and extension of theories and scholars’ subsequent empirical analyses of significant, theoretically grounded research questions, the knowledge about corporate entrepreneurship (CE) and its successful use continues to advance. Moreover, the literature suggests important relationships between the corporate environment, managers’ entrepreneurial behavior and successful implementation of corporate entrepreneurship actions. In an attempt to test some of those relationships, we describe an empirical study of 523 managers that examines the relationships among the antecedents to managers’ entrepreneurial behavior, a decision to implement entrepreneurial actions, and resulting job satisfaction and reinforcement practices.