Growth, Inequality, and Well-Being: Intertemporal and Global Comparisons

We use several well-being measures that combine average incomewith a measure of inequality to undertake intertemporal andglobal comparisons of wellbeing. The conclusions emerging fromthe intertemporal analysis are that the impact of these measureson temporal trends in well-being is relatively small on average,but changing across the decades. In particular, it suggeststhat changes in well-being were understated in the 1960s and1970s and overstated in the 1980s and 1990s. Our global analysiscovering ca. 81 per cent of the world's population demonstratesthat global well-being is at least 50 per cent smaller thanworld per capita income if the unequal income distribution isalso factored in. Conversely, growth in world well-being hasbeen larger than world income growth between 1970–1998.Since the inclusion of inequality has an important impact onwell-being comparisons, it is of great importance to generatemore consistent and intertemporally as well as internationallycomparable data on inequality. (JEL I31, D63)     

Overlapping Generations or Infinitely-Lived Agents: Intergenerational Altruism and the Economics of Global Warming

Do we need an overlapping generations model for the economics of global warming? To answer this question, an infinitely-lived agent (ILA) approach and an overlapping generations (OLG) model are contrasted. ILA and OLG can be viewed as polar representations of intergenerational altruism. With ILA an immortal agent acts through his investment/savings decisions as trustee on the behalf of the future generations. With OLG, agents need not behave altruistic. They simply save during working years and dissave completely during retirement. Nevertheless, ILA and OLG must not differ in their implication for greenhouse policy. Greenhouse gas abatement is a straightforward alternative to physical capital formation and, even without altruism, each age cohort has an incentive to provide current abatement in order to reduce future damages attributable to climate change. Indeed, under reasonable assumptions and parameter values, our simulations reveal such an invariance result. Provided carbon taxes are the only policy tool and tax revenues are recycled through socially mandated rules, projections of economic growth, climate change and energy consumption are only insignificantly affected by the choice of approach.     

Disclosure of Private Information and Reduction of Uncertainty: Environmental Liabilities in the Chemical Industry

We investigate the potential uncertainty-reducing role of accounting information in the context of contingent Superfund liability valuation. We first develop theoretical arguments for the way reduction of uncertainty regarding these contingent liabilities is expected to affect security prices. Empirical proxies are developed for two types of uncertainty surrounding contingent Superfund liabilities: site uncertainty and allocation uncertainty. In a valuation framework, we then investigate whether financial statement disclosures and accruals reduce uncertainty and thereby affect security valuation. Specifically, we analyze the interaction of private information contained in firm disclosures and accruals with inherent uncertainty surrounding contingent Superfund liabilities. Results suggest that in a regulatory environment allowing substantial reporting discretion, firm-provided financial statement information affects valuation of contingent Superfund liabilities by reducing uncertainty. Further, we find that information revealed through accruals versus disclosures is differentially effective at reducing site and allocation uncertainty.     

Involving suppliers in product development: Insights from R&D directors and project managers

While there is increasing evidence that involving suppliers in new product development (NPD) is important, and for many firms even inevitable, there is also evidence that not all such efforts are successful. Firms aiming at implementing this strategy effectively have to pay close attention to several contingency factors on the organizational level and properly manage supplier involvement on the project level. The exploratory case study research underlying this article explores key issues to be considered when involving suppliers in NPD and the counter measures they can take. Our research shows that companies differentiate between so-called “know-how” and “capacity” projects, and that they manage them differently. Furthermore, this research shows that firms outside the automotive and high-tech manufacturing industries are likely to intensify supplier involvement in the future.     

Determinants of idea sharing in crowdsourcing: evidence from the automotive industry

Drawing on external ideas through crowdsourcing has become common practice for firms that seek to improve and extend their product portfolios. As these initiatives often address the users of products, it is essential for firms to recognize those attributes that determine these individuals' willingness to share their ideas. This study takes the example of the automotive industry to examine how three attributes of car drivers determine their sharing behavior – that is, altruism, psychological ownership of ideas, and trust in car manufacturers. Our findings suggest that trust and altruism strengthen idea sharing, while psychological ownership weakens it. Furthermore, we find that car drivers' perception of sharing‐related risk acts as an important boundary condition for these relationships.     

Flying under the radar: The effects of short-sale disclosure rules on investor behavior and stock prices

We study how disclosure requirements for large short positions affect investor behavior and security prices. Short positions accumulate just below the applicable disclosure threshold as certain investors never disclose any of their positions. Further tests suggest that this secrecy is part of investors’ general policy of avoiding disclosure to protect their unique, profitable investment strategies against reverse engineering by competitors. No evidence supports the notion that short sellers avoid disclosure because of potential adverse effects on securities' lending fees, risk of recall, or short squeezes. Finally, the evasive behavior by short sellers in response to transparency regulations hampers price discovery.     

Quality competition and entry deterrence: When to launch a second brand

We study the rationale for an incumbent to launch a second brand when facing potential entry into a market with quality‐differentiated products and a fringe producer. Depending on market size, the cost of a second brand and a potential entrant's setup cost the incumbent might use a second brand both when deterring and when accommodating entry. For low costs of brand proliferation, the high‐quality firm will prevent entry with limit qualities or multiple brands. The high‐quality incumbent will accommodate entry only if it cannot be prevented. Accommodation is always accompanied by an additional brand safeguarding the premium brand.     

Adam Smith and the division of labour: is there a difference between organisation and market?

The paper claims that, in The Wealth of Nations, the divisionof labour refers simultaneously to two different things: a socialdivision of labour and an organisational division of labour.The central point is that the organisation of work (the organisationaldivision of labour) in the firm is the logical counterpart ofthe social division of labour, and that these reflect two inseparableaspects of the process of the division of labour. Smith is thusconcerned with organisations as well as with markets, each functioningaccording to the same principle. Hence, Smith does not believethat the organisational and the social divisions of labour arefundamentally different, although he does recognise some variationbetween them and describes different states of the divisionof labour within the firm, liberal and capitalist.     

Investigating business cycle asymmetry for the G7 countries: Evidence from over a century of data

In this paper we test for asymmetric behaviour of business cycles for the G7 countries, using the entropy-based test for asymmetry suggested by Racine and Maasoumi [Racine, J.S., & Maasoumi, E. (in press-a). A versatile and robust metric entropy test of time-reversibility, and other hypotheses, Journal of Econometrics; Racine, J.S., & Maasoumi, E. (in press-b). A robust entropy based test for asymmetry. Econometric Reviews.]. We find overwhelming evidence of symmetry. In only 14% of the cases, we find some evidence of asymmetric behaviour of GDP and per capita GDP. More importantly, the period marked by the flexible exchange rate regime, over which much of the empirical work for the G7 countries has been conducted, evidence suggests that the two GDP series are symmetric.