Pricing in Segmented Markets, Arbitrage Barriers, and the Law of One Price: Evidence from the European Car Market

The paper uses micro‐level price data from the European car market to examine why there are deviations from the law of one price. The absolute law of one price is strongly rejected, but there is convergence to its relative version. Two sets of explanations are considered: (i) price‐setting in segmented markets, and (ii) arbitrage barriers. Overall, the determinants of arbitrage costs have more explanatory power. The single most important factor is the distance between markets. Evidence for Belgium and Luxembourg suggests that a single currency lowers price differences significantly.     

How Issue Size, Risk, and Complexity are Influencing External Financing Costs: German IPOs Analyzed from an Economies of Scale Perspective

This paper is focused on the cost of raising capital in Germany. A cross-sectional analysis of flotation cost data for 117 IPOs over the years 1993–1998 is presented. We find average flotation costs to be 7.77 percent of gross proceeds, while underwriting fees average 5.01 percent. Our results extend the literature in two important directions. First, contrary to the conventional economies of scale view we find marginal spreads to be rather constant in gross proceeds and to be higher for more risky and more complex offerings. Fixed costs amount to 5 to 9 percent of underwriting fees. Second, by applying a principal component analysis we find issue size, an issuer risk factor, and an offering method complexity factor to have an economicaly meaningful impact on underwriting fees.     

BUILDING CARS TO CUSTOMER ORDER — WHAT DOES IT MEAN FOR INBOUND LOGISTICS OPERATIONS?

The automotive industry is undergoing a strategic transition. Cost pressure from rising stock levels in the market and increasing incentives needed to sell these vehicles are forcing vehicle manufacturers to rethink their prevalent “stock‐push” approach, building vehicles against a forecast and selling from stock, in favor of a stock‐less “build‐to‐order” order fulfillment strategy. More responsive order fulfillment at the vehicle manufacturer level however will not only require flexible and responsive component supply, but will also have wide ramifications for the logistics operations. Based on three case studies of major inbound logistics operations, this exploratory study assesses their ability to support such a build‐to‐order approach, as well as the potential implications of such transition. The paper concludes with a set of general strategies for how these implications could be mitigated.     

Systematic review of sourcing and 3D printing: make-or-buy decisions in industrial buyer–supplier relationships

Management Review Quarterly - Additive manufacturing (AM) is regarded as a technology that has transformative and disruptive potential in nearly all industries. However, AM is not only about new...     

Representation and Educational Background of European Economists in Top Journals of Economics

We assess the contribution of European authors to 10 topjournals of economics from 1980 to 1998. Despite efforts on the European Union and national levels topromote academic excellence, European authors still play a minor role in top journals. Examining the development overtime we find little evidence for an increasing share of European contributions. Particular attention has been paidto the educational background of European authors. There is still a segmentation of academic education alonglanguage barriers in continental Europe. However, a considerable proportion of European authors has received a PhD from the US.     

Delegation and strategic incentives for managers in contests

Owners usually want their managers to maximize profits. As the literature on strategic delegation has shown it may be beneficial to owners to put a positive weight on sales in the optimal linear incentive scheme for managers to make them behave more aggressively in the market. This paper shows that if the competition between the managers can be characterized as a contest, owners may induce their managers to maximize sales. Moreover, there is a first‐mover advantage for owners when choosing their incentive schemes. If delegation is endogenous the type of contest will determine whether all owners delegate their decisions to managers or not. Copyright © 2002 John Wiley & Sons, Ltd.