Entry limiting agreements: First‐mover advantage,authorized generics,and pay‐for‐delay deals

During patent litigation, pay‐for‐delay (P4D) deals involve a payment from a patent holder of a branded drug to a generic drug manufacturer to delay entry and withdraw the patent challenge. In return for staying out of the market, the generic firm receives a payment, and/or an authorized licensed entry at a later date, but before the patent expiration. We examine why such deals are stable when there are multiple potential entrants. We combine the first‐mover advantage for the first generic with the ability of the branded manufacturer to launch an authorized generic (AG) to show when P4D deals are an equilibrium outcome. We further show that limiting a branded firm's ability to launch an AG before entry by a successful challenger will deter such deals. However, removing exclusivity period for the first generic challenger will not.     

Real Investment Implications of Employee Stock Option Exercises

This paper examines a real cost of awarding employee stock options. Based on the observation that managers are extremely concerned about earnings-per-share dilution in equity related compensation, we predict and find that firms experiencing significant employee stock option (ESO) exercises shift resources away from real investments towards the repurchase of their own stocks. We further find weak evidence of a decline in subsequent firm performance (as measured by return on assets) for several years following the cut in discretionary investments as a result of stock option exercises, though this result is sensitive to the metric used to measure performance. Collectively, our findings indicate that ESO exercises potentially impose a real cost on the firm in terms of foregone investment opportunities.     

A progress report: The ‘quality of life’ in a method of integrated planning: Aspects of an Italian research project, ‘Progetto Quadro’

This paper describes the main concepts and approaches of a method of integrated planning developed in Italy. This work, still in the research phase, is sponsored by the Italian government agency responsible for economic planning.

Formally entitled ‘Progetto Quadro’, the project involves construction of a reference framework composed of a set of highly disaggregated socio-economic accounts. This includes a resource-use analysis of structural and functional interdependencies of the economic system and of its operation with regard to a societally inspired program-structure.     

Sample attrition and labor force dynamics: Evidence from the Spanish labor force survey

In this paper we examine a number of issues that arise in investigating labor force dynamics using the Spanish Labor Force Survey (EPA). These issues are by no means specific to the Spanish case and apply to most European-style labor force surveys. Our main conclusions may be summarized as follows. First, survey nonresponse cannot be neglected. Second, the EPA tends to underestimate employment and participation of high-educated young people, and to overestimate those of the low-educated elderly. Finally, we find little evidence that attrition causes important selection biases in estimating quarterly transition probabilities.     

Lessons From Italy: A Good Pension System Needs an Effective Broader Social Policy Framework

Intereconomics - Italy, which is sometimes considered a laggard in terms of social and economic reforms, can boast a pension system that is, by and large, functioning sufficiently well in terms of...     

Organizing women for combat: The experience of the FARC in the Colombian war

The FARC, which used to be Colombia's main guerrilla force and is now in the midst of a peace process, was to a great extent a feminized group. This paper discusses why it recruited so many women, and why it recruited them as combatants. We suggest that only when the FARC adopted a highly hierarchical, self‐contained, and militaristic organizational blueprint did it get involved in the massive recruitment of women as combatants. We discuss the way in which organizational mechanisms and ideology interacted to produce such an outcome, and how this interaction marked both the organization and the trajectories of the women who joined it.     

Dario Gaggio. In Gold We Trust: Social Capital and Economic Change in the Italian Jewelry Towns

In the mid-1970s, Italy was a sort of mystery for internationalobservers. After the glorious years of the ‘economic miracle,’everything seemed to be going wrong. Both State-owned and largeprivate corporations, which had made an outstanding contributionto the fast growth experienced in the 1950s and the 1960s, werehit by serious problems of governance (for the former, the inappropriateintervention of the political power while the latter operatedunder the weight of inefficient ownership) and seemed to betrapped in an insurmountable crisis. Social conflict in thefactories was     

Consumer profiles section: Consumer profiles for conventional bed and waterbed owners in Canada

This study examines consumer profile data on waterbed and conventional bed consumers. Five hundred conventional and waterbed consumers in Canada were randomly selected from two national lists of waterbed/mattress purchasers from 1981 to the present. A 73-item questionnaire was sent by mail to all of the selected respondents. The cover letter stated the purpose of the project; to study why people bought the bed that they are presently using. One hundred and sixty-two completed, useable questionnaires were returned, yielding a response rate of 37%. Following a series of multivariate analyses, a consumer profile for the two bed users was developed. Both groups tended to be married. The conventional bed consumers had: (a) either no children or one child at home; (b) a mean age of 44; and, (c) an average income in the $30,000-$40,000 range. Waterbed consumers had: (a) a mean age of 36, (b) one child living at home; and, (c) an average income in the $20,000-$30,000 range. On the Adorno F scale, the conventional bed user was found to be more conservative and authoritarian as compared to the waterbed user. The results did not support the notion that waterbed users are abnormally sexually-oriented or “kinky”. For both groups, the price paid for the purchased bed fell in the $600 to $650 range. Implications for retailers were discussed.     

Analyst Report Readability

Using an extensive database of 356,463 sell‐side equity analysts' reports from 2002 to 2009, this study is one of the first to analyze the readability of analysts' reports. We first examine the determinants of variations in analyst report readability. Using several proxies for ability, we show that reports are more readable when issued by analysts with higher ability. Second, we test the relation between analysts' report readability and stock trading volume reactions. We find that trading volume reactions increase with the readability of analysts' text, consistent with theoretical models that predict that more precise information (and hence more informative signals) results in investors' initiating trades. These results support the view that the readability of analysts' reports is important to analysts and capital market participants.     

Testing for time-invariant unobserved heterogeneity in generalized linear models for panel data

Recent literature on panel data emphasizes the importance of accounting for time-varying unobservable individual effects, which may stem from either omitted individual characteristics or macro-level shocks that affect each individual unit differently. In this paper, we propose a simple specification test of the null hypothesis that the individual effects are time-invariant against the alternative that they are time-varying. Our test is an application of Hausman (1978) testing procedure and can be used for any generalized linear model for panel data that admits a sufficient statistic for the individual effect. This is a wide class of models which includes the Gaussian linear model and a variety of nonlinear models typically employed for discrete or categorical outcomes. The basic idea of the test is to compare two alternative estimators of the model parameters based on two different formulations of the conditional maximum likelihood method. Our approach does not require assumptions on the distribution of unobserved heterogeneity, nor it requires the latter to be independent of the regressors in the model. We investigate the finite sample properties of the test through a set of Monte Carlo experiments. Our results show that the test performs well, with small size distortions and good power properties. We use a health economics example based on data from the Health and Retirement Study to illustrate the proposed test.