Strictness of leniency programs and asymmetric punishment effect

We analyze the impact of leniency programs on the behavior of firms participating in illegal cartel agreements in a two-stage repeated game model. Our approach takes into account asymmetric punishment effect and allows to discuss the design of leniency programs in the setting with asymmetries. The main contribution of the paper is that we consider heterogeneous firms. This heterogeneity results in additional costs in case of disclosure of the cartel, which are caused by asymmetric punishments. Next, following current antitrust rules, we analyze effects of the strictness of leniency programs, which reflects the likelihood of getting a complete exemption from fine even in case many firms self-report simultaneously. Our main conclusion is that leniency programs work better for small companies, since a lower rate of law enforcement is needed in order to induce self-reporting by smaller firms, while big firms are less likely to start a cartel in the first place given the possibility of self-reporting in future. Finally, we analyze optimal enforcement strategies of the antitrust authority and conclude that the authority with limited resources should implement more generous leniency rules the more cartelized the economy is.     

The Great Recession and the Rise of Populism

Intereconomics - The success of populist rhetoric in Europe is worrisome as it presents a threat to national and European institutions, the rule of law, and other fundamental free-market democratic...     

The effect of mergers and acquisitions on environmental,social and governance performance and market value: Evidence from EU acquirers

This study explores the effect of environmental, social, and governance (ESG) performance on market value and performance in the context of mergers and acquisitions. We examine whether acquisition of targets with better ESG performance can help acquirers to increase their own ESG performance and whether the market values the increased ESG performance positively. Moreover, we explore whether the acquisition of targets with better ESG performance affects the market value of acquirers. For this study, we utilize a sample of 100 European mergers and acquisitions between 2003 and 2017, for which matching data on the ESG performance of both the target and acquiring firms are available. Our results show that the postmerger ESG performance of the acquirer increases following the acquisition of a target that has higher ESG performance than that of the acquirer in the premerger stage, whereas the postmerger market value of the acquirer increases following an increase in the acquirer's postmerger ESG performance in relation to its premerger ESG performance. Finally, we provide partial evidence of a positive relationship between the postmerger market value of the acquirer and the acquisition of a target with higher ESG performance than itself in the premerger stage.     

Satisfying the basics: reflections from a consumer perspective of attractions management at the Millennium Dome,London

The Millennium Dome, London, was supposed to be the centrepiece of UK celebrations marking the start of the twenty‐first century. Unwittingly, it also emerged as the centrepiece of much media negativity and scrutiny — for the full length of its (projected) 1 year of opening. Four years after the doors closed, and with the perspective of time, this study reflects on the Millennium Dome as a case study of visitor attractions management — with data drawn from the consumer perspective at the time of opening. The focus of the primary research is on the satisfaction of visitors to the Millennium Dome. This was carried out when the attraction was weathering the media storm following its opening. Both quantitative and qualitative data was gathered from 530 exit questionnaires and 350 qualitative interviews. The quantitative data revealed visitor assessments of the experience of the Millennium Dome as a whole, and their assessments of its constituent parts (zones). The findings of the qualitative interviews led to the construction of a typology of meanings for visitors to the Millennium Dome. Even though time has elapsed since closure, both the quantitative and the qualitative findings still have a wider application in the interpretation of the visitor experience in attractions. Recommendations at the time indicated a need for management to focus on ‘the basics’ of the visitor experience with the addendum that a failure to do so could detract from ‘the most amazing day out ever’ or, indeed, ‘a very special day’ — and to ensure a closer match between marketing expectations and the reality of the experience. Reflection has not altered such often neglected but fundamental tenets. Copyright © 2005 John Wiley & Sons, Ltd.     

How Do Start-up Acquisitions Affect the Direction of Innovation?*

A start-up engages in an investment portfolio problem by choosing how much to invest in a “non-rival” project and a “rival” project that threatens an incumbent. Anticipating its acquisition, the start-up distorts its investment portfolio in order to raise acquisition rents. This may improve or worsen the direction of innovation and consumer surplus. The bigger the difference in social surplus appropriability across the two projects, the more likely it is that the direction of innovation improves and consumers benefit from an acquisition. These results also hold if the acquirer takes over the research facilities of the start-up.     

Consumer Confidence and Asset Prices: Some Empirical Evidence

We explore the time-series relationship between investor sentimentand the small-stock premium using consumer confidence as a measureof investor optimism. We estimate the components of consumerconfidence related to economic fundamentals and investor sentiment.After controlling for the time variation of beta, we study thetime-series variation of the pricing error with sentiment. Overthe last 25 years, investor sentiment measured using consumerconfidence forecasts the returns of small stocks and stockswith low institutional ownership in a manner consistent withthe predictions of models based on noise-trader sentiment. Sentimentdoes not appear to forecast time-series variation in the valueand momentum premiums. (JEL G10, G12, G14)     

Competitive prices as optimal cartel prices

In a linear oligopoly model with antitrust enforcement, the optimal cartel price converges to the competitive equilibrium price. The set of sustainable cartel prices does not shrink to the competitive price. We identify necessary conditions for this counter-intuitive convergence result.     

Relationship between Corporate Climate Change Disclosures and Firm Factors

As carbon regulation evolves and becomes specialized in addressing carbon reduction issues, stakeholders will demand that firms provide increased information regarding corporate climate change practices. This paper contributes to the international research that examines the relationship between environmental information disclosures and additional firm factors. To do so, we have conducted an empirical analysis of the relationship between the corporate climate change disclosure practices of firms listed in the Athens Stock Exchange and firm factors, such as size, profitability, leverage and activity sector. Our results indicate there is a significant positive relationship between size and increased corporate disclosures regarding climate change practices. However, no significant relationship is detected between profitability or leverage and corporate climate change disclosures. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment     

Hybrid markets, tick size and investor trading costs

This paper shows how the tick size affects equilibrium outcomes in a hybrid stock market such as the NYSE that features both a specialist and a limit order book. Reducing the tick size facilitates the specialist's ability to step ahead of the limit order book, resulting in a reduction in the cumulative depth of the limit order book at prices above the minimum tick. If market demand is price-sensitive, and there are costs of limit order submission, the limit order book can be destroyed by tick sizes that are either too small or too large. We show that trading cost is minimized at larger tick sizes for larger market orders, creating an incentive to submit smaller orders when tick size is reduced. With a smaller tick size, specialist participation increases and specialist profit increases slightly for small market orders, and considerably for large market orders.     

Long COVID? Prospects for economic scarring from the pandemic

This paper examines the potential persistent effects (scarring) of the COVID-19 pandemic on the economy and the channels through which they may occur. Our findings from a broad set of historical recessions confirm that recessions are associated with persistent output losses and that the greatest scarring has occurred following financial crises. The amount of scarring following pandemic and epidemic recessions in the sample is in between that of typical recessions and financial crises. Results on the channels show that the productivity channel is important, as all types of recessions have been followed by persistent losses to total factor productivity.