Computing equilibria of GEI by relocalization on a Grassmann manifold

An algorithm is described to compute equilibria of the general economic model with incomplete asset markets, that is, of GEI. The algorithm is based on the existence of a route of zeros of a homotopy whose domain includes the price simplex and a Grassmann Manifold. This route is followed, in effect, by localizing and following diffeomorphic pieces in Euclidean space, and by relocalizing as is necessary.     

Research notes and communications management and organizational change: A note on the railroad industry

Hypotheses which relate top-level managers' age, years of company and industry service, and education to strategic change are studied with a sample of 855 managers from 27 railroads. Results generally support hypotheses that younger managers and those with less experience are more likely to alter their strategies with changing environmental conditions.     

Capital Investment under Alternative Marketing Scenarios in the Hog Industry: A Real Option Approach

This paper uses a real option approach to analyze the impact of alternative marketing contracts on the decision to invest in a cooperatively owned hog facility. For the numerical analysis of the impact, this paper uses a simulation method that incorporates early exercise, multiple‐state variables, multi‐choice decisions and temporal optimality. The results show that the option values that stem from the value of waiting to invest and choosing between alternative marketing methods amounts to 20–36% of the initial investment. Further, having an option to choose an alternative marketing method with different risk structure does add to the value of waiting to invest. Having an option to enter a 15‐year marketing contract increases the value of waiting by as much as $117,097 for the pork production example in this paper. Finally, the value of the option to wait is unilaterally lower under a risk‐reducing contract scenario than under a spot market alternative. This could explain the explosion in hog production facility investment during the 1990s when prevalence of contract production increased. Les auteurs ont recouru à l'approche du choix véritable pour analyser l'impact d'autres solutions de mise en marché sur la capacité d'investir ou pas dans un élevage de porcs exploitéà la manière d'une coopérative. Aux fins de l'analyse, on s'est servi d'une méthode de simulation intégrant une brève campagne, de multiples variables d'État, des décisions à choix multiple et des conditions optimales dans le temps. Les résultats indiquent que l'existence d'un choix réel permettant à l'exploitant d'attendre avant d'investir et de sélectionner entre plusieurs méthodes de mise en marché représente 20 à 36 pour cent de l'investissement initial. Par ailleurs, le fait d'avoir accès à une autre méthode de mise en marché, à structure de risque différente, ne donne pas plus de valeur à la capacité d'attendre avant de procéder aux investissements. La possibilité de signer une entente de commercialisation de quinze ans accroît la valeur de l'attente de jusqu'à 117,097 $ pour le type d'élevage porcin retenu comme exemple. Enfin, l'existence d'une entente de commercialisation atténuant les risques réduit unilatéralement la valeur de l'option « attente », comparativement à ce qui se produit quand l'éleveur n'a d'autre choix qu'écouler ses bêtes sur le marché au comptant. Ces résultats pourraient expliquer l'explosion des investissements observée dans le secteur du porc au cours des années 90, où la production sous contrat avait sensiblement augmenté.     

Evolutionary Stability in the Investment-Opportunism-Retaliation Game

Can economically efficient outcomes be obtained and sustained in the absence of externally enforced property rights? We study the evolutionary properties of a game that exhibits two well-defined Nash equilibria: one generates an inefficient outcome while the other set generates an efficient outcome supported by the potential for retaliation. Although standard forward-looking refinements eliminate the efficient equilibrium, neither equilibrium type satisfies strict evolutionary stability criteria. However, both types of equilibrium define strategies that are neutrally stable, which makes them vulnerable to drift in dynamic environments. We conduct computer simulation experiments in which players learn adaptively via a tournament selection mechanism called sophisticated experimentation. Our simulations demonstrate that while the system spends a disproportionately high proportion of time in the inefficient equilibrium set, the efficient equilibrium is pervasive as the system drifts back and forth between the equilibrium sets, never settling on one or the other.     

The Financial and Operational Impacts of FERC Order 636 on the Interstate Natural Gas Pipeline Industry

The Federal Energy Regulatory Commission's Order 636 fundamentally altered the regulatory and operational environment of the natural gas industry in 1992, as the culmination of several directives aimed at relaxing regulation and fostering competition. We hypothesize that gas pipeline firms subsequently changed their operational and financial behavior in ways consistent with reduced balkanization, increased competition, and reduced expense preference behavior. Our results indicate that these firms have become more homogeneous financially but less so operationally. We find evidence that the marginal profitability of various pipeline activities has responded more to financial market conditions than to the regulatory environment.     

Gender-Based Vicarious Sensitivity to Disempowering Behavior in Organizations: Exploring an Expanded Concept of Hostile Working Environment

The purpose of this study was to explore evidence of gender-based vicarious sensitivity to disempowering behavior in organizations, expanding the concept of hostile working environment beyond the context of sexual harassment. Male and female graduate and undergraduate students viewed 10 video segments of Anita Hill's interview by U.S. senators during the October 1991 confirmation hearings of Supreme Court Justice Nominee, Clarence Thomas. Although no significant relationship was found between the personal attributes of age and ethnicity to perceptions of disempowering behavior, female participants reported seeing significantly more offensive behavior in the video segments than did male participants. The results are discussed in terms of greater female sensitivity to common forms of disempowering behavior in organizations, and having a disparate negative impact and systematically placing women at a disadvantage in today's workforce.     

The case of the team-spirit tailspin

Richard Johnson, newly appointed president of Century Airlines, knew the company's survival depended on customer service, which in turn depended on motivated employees. So he created the Century Spirit program to build team spirit by encouraging employee participation, individual initiative, and open communication. Among the program's early successes was a newspaper started by a group of flight attendants. The Plane Truth published information about benefits and work conditions as well as feature stories and humorous articles. It quickly became popular not only with flight attendants but also with pilots, machinists, and baggage handlers. As time went on, though, the Plane Truth began to run articles critical of the company. When management cut back workers' hours, the newspaper questioned what sacrifices the executives were making. When technical services released figures showing long turnaround times, the paper questioned the machinists' work ethic. Worried that customers might see the newspaper, Richard Johnson wanted to cancel it. The president of the flight attendants union also wanted to see it go because it was stirring up trouble with the machinists. Joan Raffin, Century's human resources director, was asked to stop the publication. But she hesitated. She knew that employee morale was on the brink, but she didn't know whether the newspaper was venting workers' frustrations and reinforcing team spirit or stirring up old animosities and bringing the whole company down. Was it creating more tension than unity or vice versa? Experts on organizational change, motivation, and management analyze the situation and make recommendations for what Joan Raffin should do.     

Dimensions of quality upgrading

The impact of the Central and Eastern European (CEE) economies’ trade integration with European markets on CEE trade structures has been studied extensively. These studies frequently observe a quality upgrading of CEE exports. In this paper we consider three dimensions of quality upgrading: upgrading across industries, upgrading across different quality segments within industries and, finally, product upgrading within quality segments inside industries. For the analysis we partition industries into quality segments based on EU‐15 import unit values. The results for ten CEE countries (comprising the CEE‐5, the Baltics and South East Europe) and thirteen industries suggest fundamental differences, both across country groups and across the three different notions of quality upgrading. The CEE‐5 show no evidence of entering a ‘low‐quality trap’ in all three dimensions. By contrast, while there is a general catching‐up process across industries and inside quality segments, the second notion of low‐quality specialization may be applicable within the high‐tech industries to the performance for the Baltics and South East Europe as a group.     

Policy options for afforestation in Flanders

This paper analyses current and alternative afforestation policy instruments in Flanders. First we select forest sites that maximize net social benefits given a constraint on the total area of new forests and then we select policy instruments that yield this optimal combination of sites. For each policy option, we calculate the associated costs for landowners and government as well as net social benefits for society. Our empirical illustration shows that the welfare gain is considerable if the afforestation subsidy is conditioned on an objective criterion rather than a case-by-case approach. Our results also show that it is worthwhile to consider alternative policy instruments, such as auctions, not previously used in Belgian legislation.