Entry may increase network providers’ profit

In this paper the incentives for platform sponsors to open up their networks for independent rivals is analyzed. It is shown that open access may increase the platform sponsors’ profit levels and enhance quality improving investments. In addition, it is shown that a commitment to allow entry reduces the difference between ex ante and ex post compatibility incentives.     

Experience and the unexpected: risk and mitigation issues for operating underground storage silos for coal-fired power plant

Observed autoignition events and extinguishing the resulting smouldering fires in an underground storage system of a coal-fired power plant have provided insight into the array of contributing variables, and some experience on quantifying the risk with alternative scenarios of event initiation, progress and potential mitigation. Although the first attempts to quantify the risk suggest high sensitivity to the sequence of action taken after fire alarm, and no similar storage sites really exist, some recommended preventive, corrective and other mitigating activities can be at least partly defined and improved by using the cumulative experience and parallel efforts in other closed or underground storage sites. However, there are also so-called black (or at least grey) swans: unexpected events for which the facility may be poorly prepared for. In the case of the underground storage silos, such an event was experienced when incoming cold coal during a harsh winter season froze the sewer system that normally protects the stored coal from seepage water. With blocked normal bypass, the seepage water found its way to the coal silos and created large clumps of icy coal that blocked the coal conveyors. Although freezing weather is not unusual at high-latitude power plants, the common methods to combat freezing of coal are mainly useful for open storage sites and above-ground transport. Options for mitigation are discussed, as well as the event chain leading to an event that had never previously occurred. The case is discussed from the point of view of options to prepare for rare or unforeseen events.     

The Social Psychological Underpinnings of Commons’s Institutional Economics: The Significance of Dewey’s Human Nature and Conduct

The institutional environment of science differs across countries. Its particularities have an impact on productivity of scientific enterprise in terms of both research and teaching. Reform of the system of higher education occupies an important place in programs of catch-up modernization. Attempts to replicate Western institutional arrangements and organizational designs in this area have been undertaken in Russia since the very beginning of economic and political reforms of the 1990s. This paper considers a particular transplant, the Higher School of Economics (HSE) established in 1992, and its subsequent evolution. A structural analysis shows its divergence from the organizational patterns that served as a model. The HSE case is compared with several "representative" Western universities as well as other Russian universities. When explaining divergent patterns between the HSE and the Western counterparts, special attention is paid to the issue of power relationships and their role in the functioning of the scientific organization. The paper aims to contribute to the discussion of "cultural entrepreneurs" and their motivation.     

Slotting Allowances and Manufacturers' Retail Sales Effort

A manufacturer's incentives to undertake noncontractible investments depend on the profit margin on her sales to the retailer, and slotting allowances can facilitate such incentives by increasing unit wholesale prices. At first glance it is tempting to conclude that slotting allowances should be particularly prevalent for product categories where the manufacturer's scope for undertaking noncontractible sales effort is relatively large. At odds with this, the Federal Trade Commission (FTC) among other organizations, reports that slotting allowances are more commonly used for product categories where the scope for noncontractible effort by the manufacturer is presumably relatively small. To scrutinize this puzzle we set up a simple model with one manufacturer and one retailer, where the manufacturer undertakes noncontractible demand‐enhancing investments. The predictions from the model are consistent with market observations.     

Inventory investment and production in Europe during the “Great Recession”: Is there a pattern?

The paper examines the nexus between inventory investment and the change in aggregate production during the “Great Recession” of 2008/09 for 29 European countries. A fairly uniform pattern emerges. Inventory investment is positively correlated with changes in production and follows the latter with a time-lag of two to three quarters. Very few countries (Austria, Greece, Spain and Switzerland) diverge from the typical pattern. This might hint to problems with respect to data quality.     

Demand-side Spillovers and Semi-collusion in the Mobile Communications Market

We analyze roaming policy in the market for mobile telecommunications. Firms undertake quality improving investments in network infrastructure in order to increase geographical coverage, capacity in a given area, or functionality. Prior to investments, roaming policy is determined. We show that under collusion at the investment stage, firms and a benevolent welfare maximizing regulators interests coincide, and no regulatory intervention is needed. When investments are undertaken non-cooperatively, firms and the regulators interests do not coincide. Contrary to what seems to be the regulators concern, firms would decide on a higher roaming quality than the regulator. The effects of allowing a virtual operator to enter are also examined. Furthermore, we discuss some implications for competition policy with regard to network infrastructure investment.