We review the literature on public sector outsourcing to explore if the theoretical predictions from the incomplete contracts literature hold up to recent empirical evidence. Guided by theory, we arrange services according to the type and magnitude of their contractibility problems. The empirical studies point at rather favourable outsourcing outcomes, in terms of costs and quality, for services without severe contracting problems. The picture is more mixed for services with tougher contracting problems, with the weight of the evidence in favour of public provision. This difference between services is largely in line with the property-rights framework and theories of incomplete contracts.
{"title":"Outsourcing Public Services: Contractibility, Cost, and Quality","authors":"F. Andersson, Henrik Jordahl, Jens Josephson","doi":"10.1093/CESIFO/IFZ009","DOIUrl":"https://doi.org/10.1093/CESIFO/IFZ009","url":null,"abstract":"We review the literature on public sector outsourcing to explore if the theoretical predictions from the incomplete contracts literature hold up to recent empirical evidence. Guided by theory, we arrange services according to the type and magnitude of their contractibility problems. The empirical studies point at rather favourable outsourcing outcomes, in terms of costs and quality, for services without severe contracting problems. The picture is more mixed for services with tougher contracting problems, with the weight of the evidence in favour of public provision. This difference between services is largely in line with the property-rights framework and theories of incomplete contracts.","PeriodicalId":416291,"journal":{"name":"IO: Firm Structure","volume":"98 2 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-05-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114170508","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The aim of this paper is to examine whether or not the structure of the board of directors and, in particular, board size, independence and remuneration have an impact on firm performance. The sample examined is UK FTSE 100 non-financial companies using data from the period 2012 to 2015. A regression analysis has been used concluding a significant positive correlation between board remuneration and firm performance, namely Return on Assets and Tobin’s Q. The study also concluded a positive correlation between board size and ROA, and between board independence and Tobin’s Q. Additionally, a significant negative correlation between the control variables (i.e. company size and industry) and Return on Assets.
{"title":"How Does Board Structure Impact on Firm Performance in the UK?","authors":"Ahmad Alqatan, Imad Chbib, K. Hussainey","doi":"10.22495/CBV15I2ART2","DOIUrl":"https://doi.org/10.22495/CBV15I2ART2","url":null,"abstract":"The aim of this paper is to examine whether or not the structure of the board of directors and, in particular, board size, independence and remuneration have an impact on firm performance. The sample examined is UK FTSE 100 non-financial companies using data from the period 2012 to 2015. A regression analysis has been used concluding a significant positive correlation between board remuneration and firm performance, namely Return on Assets and Tobin’s Q. The study also concluded a positive correlation between board size and ROA, and between board independence and Tobin’s Q. Additionally, a significant negative correlation between the control variables (i.e. company size and industry) and Return on Assets.","PeriodicalId":416291,"journal":{"name":"IO: Firm Structure","volume":"161 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-05-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134266726","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The global strategy literature highlights the role of headquarters (HQ) in realizing global integration benefits while enabling independent subsidiary strategic initiatives. We construct a game-theoretic model of the interaction between HQ and subsidiaries, and, building on procedural justice theory, we analyze the motivational costs that can result from the anticipation or realization of HQ intervention in subsidiary initiatives. We also analyze the implications for MNC-level value creation when HQ managers, fearing subsidiary managers’ emotion-based reactions, refrain from intervening. We derive a number of counter-intuitive results, for example, that good HQ behavior may involve forgoing opportunities for value creation, and that procedural justice systems may sometimes be counterproductive.
{"title":"The Role of Procedural Justice for Global Strategy and Subsidiary Initiatives","authors":"C. Asmussen, N. Foss, P. Nell","doi":"10.2139/ssrn.3396472","DOIUrl":"https://doi.org/10.2139/ssrn.3396472","url":null,"abstract":"The global strategy literature highlights the role of headquarters (HQ) in realizing global integration benefits while enabling independent subsidiary strategic initiatives. We construct a game-theoretic model of the interaction between HQ and subsidiaries, and, building on procedural justice theory, we analyze the motivational costs that can result from the anticipation or realization of HQ intervention in subsidiary initiatives. We also analyze the implications for MNC-level value creation when HQ managers, fearing subsidiary managers’ emotion-based reactions, refrain from intervening. We derive a number of counter-intuitive results, for example, that good HQ behavior may involve forgoing opportunities for value creation, and that procedural justice systems may sometimes be counterproductive.","PeriodicalId":416291,"journal":{"name":"IO: Firm Structure","volume":"53 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-04-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126481180","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Recent years have seen a significant increase in complexity of multinational enterprises (MNEs) ownership structures. Complex corporate structures raise concerns on the effectiveness of national and international investment policies, based on the notion of investors’ nationality. This motivates this research effort aimed at analysing the ownership structures of some 700 thousand foreign affiliates (FAs). A new methodology, the bottom-up approach, is introduced. The main objective is to empirically map the "shareholder space" of FAs, along the vertical dimension, from the direct shareholders to the ultimate owners. We find that FAs are often part of transnational investment chains; more than 40% of foreign affiliates have direct and ultimate shareholders in different jurisdictions ("double or multiple passports"). Based on shareholders’ nationality, we then propose and empirically analyse the salient features of four main archetypes of FAs ownership structure: plain foreign, conduit structures, round-tripping and domestic hubs. Each poses specific challenges to the policy-maker.
{"title":"The Blurring of Corporate Investor Nationality and Complex Ownership Structures","authors":"Eleonora Alabrese, B. Casella","doi":"10.2139/ssrn.3372329","DOIUrl":"https://doi.org/10.2139/ssrn.3372329","url":null,"abstract":"Recent years have seen a significant increase in complexity of multinational enterprises (MNEs) ownership structures. Complex corporate structures raise concerns on the effectiveness of national and international investment policies, based on the notion of investors’ nationality. This motivates this research effort aimed at analysing the ownership structures of some 700 thousand foreign affiliates (FAs). A new methodology, the bottom-up approach, is introduced. The main objective is to empirically map the \"shareholder space\" of FAs, along the vertical dimension, from the direct shareholders to the ultimate owners. We find that FAs are often part of transnational investment chains; more than 40% of foreign affiliates have direct and ultimate shareholders in different jurisdictions (\"double or multiple passports\"). Based on shareholders’ nationality, we then propose and empirically analyse the salient features of four main archetypes of FAs ownership structure: plain foreign, conduit structures, round-tripping and domestic hubs. Each poses specific challenges to the policy-maker.","PeriodicalId":416291,"journal":{"name":"IO: Firm Structure","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-04-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130559988","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Greek Abstract: Πρόβλημα: H θεωρία και η πρακτική του διπλογραφικού συστήματος καταγραφής και επεξεργασίας της λογιστικής πληροφορίας των οικονομικών γεγονότων υπήρξαν οι πλέον επιτυχείς κατά τα προηγούμενα 600 χρόνια, παρά τα ρήγματα στο επίπεδο της σύνταξης και τις συγχύσεις στο επίπεδο της σημασίας. Όμως, η απαλοιφή των δυσμενών επιπτώσεων των ρηγμάτων αυτών στην ακεραιότητα της λογιστικής πληροφορίας είναι αδύνατη σε συνθήκες μεγάλου όγκου πληροφοριών.
Μέθοδος: Σήμερα, η δημιουργία ενός συντακτικά συνεπούς και σημασιολογικά πλήρους συστήματος καταγραφής και επεξεργασίας της λογιστικής πληροφορίας είναι ένα έργο εφικτό, χάρη στις προόδους στους τομείς της πολυπλοκότητας, της γνωσιακής επιστήμης, και της τεχνολογίας της πληροφορικής. Στο νέο αυτό πλαίσιο, η παρούσα μονογραφία οργανώνει τις λογιστικές εγγραφές ως ένα δίκτυο λογαριασμών (κόμβοι) και πράξεων (δεσμοί) το οποίο σέβεται τις τρεις εγγενείς ιδιότητες των οικονομικών γεγονότων: (i) ανεξαρτησία πράξεων (αίτια) και λογαριασμών (αποτελέσματα), (ii) δομική σύζευξη μεταξύ φυσικών και χρηματοπιστωτικών γεγονότων, και (iii) συνθετικότητα ροών, πράξεων, και λογαριασμών. Η ενσωμάτωση των ιδιοτήτων αυτών στις λογι-στικές εγγραφές επιτρέπει την συνεπή και αποτελεσματική μαθηματικοποίηση του πρωτογενούς δικτύου των οικονομικών γεγονότων.
Αποτελέσματα: Η δικτυακή περιγραφή των οικονομικών γεγονότων εξαλείφει την παραμόρφωση της πληροφορίας στα επίπεδα της σύνταξης και της σημασίας, μειώνει εντυπωσιακά τις διαδικασίες ελέγχου στο πραγματικό επίπεδο, ενοποιεί τις θεμελιώδεις έννοιες της λογιστικής και της οικονομίας, και ενισχύει την ικανότητα χρηματοπιστωτικής και διαχειριστικής λογοδοσίας του συστήματος. Ο ισολογισμός δεν είναι αξίωμα αλλά προκύπτει συνθετικά, οπότε παίρνει διάφορες μορφές ανάλογα με την σκοπιά από την οποία θέλουμε να τον διαβάσουμε. Επίσης επιτρέπει την επεξεργασία της λογιστικής πληροφορίας σε τρεις νέους τετραδιάστατους χώρους: πρόσπτωσης ή διπλογραφικό, γειτνίασης ή τοπολογικό, και αφινικό, όπου επιλύονται τα προβλήματα διάρθρωσης των λογιστικών καταστάσεων και οι τρέχουσες εννοιολογικές αντιπαραθέσεις και νοητικές πλάνες. Συγχρόνως, ανοίγουν νέοι δρόμοι στην έρευνα, η οποία εμφανίζει τα τελευταία χρόνια έντονα σημάδια κόπωσης.
English Abstract:Problem: The theory and practice of the double-entry accounting system of recording and reporting economic events, has been very successful in the last 600 years, despite the flaws at the level of syntax and the confusions at the level of semantics. However, the elimination of the adverse effects of these flaws on the integrity of the accounting information is impossible under conditions of big data.
Solution: Today, a project for a new design of the accounting system is attainable thanks to advances in the fields of complexity, cognitive science, and infor
{"title":"Οι Δικτυακές Ιδιότητες των Οικονομικών Γεγονότων: Οι Διαστάσεις της Λογιστικής Πληροφορίας (The Network Properties of Economic Events: The Dimensions of Accounting Information)","authors":"Οι Δικτυακές, Ιδιότητες των, Οικονομικών Γεγονότων, Οι Διαστάσεις, της Λογιστικής Πληροφορίας, Κωνσταντίνος Ρ. Περτσεμλίδης","doi":"10.2139/ssrn.3293269","DOIUrl":"https://doi.org/10.2139/ssrn.3293269","url":null,"abstract":"The English version of this paper can be found at <a href=\"http://ssrn.com/abstract=2654665\">http://ssrn.com/abstract=2654665</a>.<br><br><b>Greek Abstract:</b> Πρόβλημα: H θεωρία και η πρακτική του διπλογραφικού συστήματος καταγραφής και επεξεργασίας της λογιστικής πληροφορίας των οικονομικών γεγονότων υπήρξαν οι πλέον επιτυχείς κατά τα προηγούμενα 600 χρόνια, παρά τα ρήγματα στο επίπεδο της σύνταξης και τις συγχύσεις στο επίπεδο της σημασίας. Όμως, η απαλοιφή των δυσμενών επιπτώσεων των ρηγμάτων αυτών στην ακεραιότητα της λογιστικής πληροφορίας είναι αδύνατη σε συνθήκες μεγάλου όγκου πληροφοριών.<br><br>Μέθοδος: Σήμερα, η δημιουργία ενός συντακτικά συνεπούς και σημασιολογικά πλήρους συστήματος καταγραφής και επεξεργασίας της λογιστικής πληροφορίας είναι ένα έργο εφικτό, χάρη στις προόδους στους τομείς της πολυπλοκότητας, της γνωσιακής επιστήμης, και της τεχνολογίας της πληροφορικής. Στο νέο αυτό πλαίσιο, η παρούσα μονογραφία οργανώνει τις λογιστικές εγγραφές ως ένα δίκτυο λογαριασμών (κόμβοι) και πράξεων (δεσμοί) το οποίο σέβεται τις τρεις εγγενείς ιδιότητες των οικονομικών γεγονότων: (i) ανεξαρτησία πράξεων (αίτια) και λογαριασμών (αποτελέσματα), (ii) δομική σύζευξη μεταξύ φυσικών και χρηματοπιστωτικών γεγονότων, και (iii) συνθετικότητα ροών, πράξεων, και λογαριασμών. Η ενσωμάτωση των ιδιοτήτων αυτών στις λογι-στικές εγγραφές επιτρέπει την συνεπή και αποτελεσματική μαθηματικοποίηση του πρωτογενούς δικτύου των οικονομικών γεγονότων.<br><br>Αποτελέσματα: Η δικτυακή περιγραφή των οικονομικών γεγονότων εξαλείφει την παραμόρφωση της πληροφορίας στα επίπεδα της σύνταξης και της σημασίας, μειώνει εντυπωσιακά τις διαδικασίες ελέγχου στο πραγματικό επίπεδο, ενοποιεί τις θεμελιώδεις έννοιες της λογιστικής και της οικονομίας, και ενισχύει την ικανότητα χρηματοπιστωτικής και διαχειριστικής λογοδοσίας του συστήματος. Ο ισολογισμός δεν είναι αξίωμα αλλά προκύπτει συνθετικά, οπότε παίρνει διάφορες μορφές ανάλογα με την σκοπιά από την οποία θέλουμε να τον διαβάσουμε. Επίσης επιτρέπει την επεξεργασία της λογιστικής πληροφορίας σε τρεις νέους τετραδιάστατους χώρους: πρόσπτωσης ή διπλογραφικό, γειτνίασης ή τοπολογικό, και αφινικό, όπου επιλύονται τα προβλήματα διάρθρωσης των λογιστικών καταστάσεων και οι τρέχουσες εννοιολογικές αντιπαραθέσεις και νοητικές πλάνες. Συγχρόνως, ανοίγουν νέοι δρόμοι στην έρευνα, η οποία εμφανίζει τα τελευταία χρόνια έντονα σημάδια κόπωσης.<br><br><br><b>English Abstract:</b>Problem: The theory and practice of the double-entry accounting system of recording and reporting economic events, has been very successful in the last 600 years, despite the flaws at the level of syntax and the confusions at the level of semantics. However, the elimination of the adverse effects of these flaws on the integrity of the accounting information is impossible under conditions of big data.<br><br>Solution: Today, a project for a new design of the accounting system is attainable thanks to advances in the fields of complexity, cognitive science, and infor","PeriodicalId":416291,"journal":{"name":"IO: Firm Structure","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128409343","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This Essay explains why the Supreme Court’s economic reasoning in its recent Ohio v. American Express Co. (“Amex”) decision is wrong. The Amex case involved the use of what are called “antisteering” restraints in which a retailer is not allowed to use a variety of tactics to steer a consumer away from using an American Express (“Amex”) card and toward using another payment mechanism. The reason why a merchant might want to do this is because the cost that the merchant incurs when a customer uses an Amex card can be higher than the cost that the merchant incurs when the customer uses either another credit card, debit card, or cash. Although not challenged in the Amex case, the Amex contractual rules also prevent a retailer from imposing a surcharge on customers who use an Amex card to reflect the higher merchant cost. It is interesting to note that some countries—such as Australia—have regulated certain credit card fees, others have forbidden credit card companies from telling merchants that they cannot surcharge, and some states in the United States—such as New York—have forbidden merchants from surcharging. Restraints on surcharging or steering are examples of restraints that Ralph Winter and I call “vertical most-favored-nation restraints,” (“vMFN”) in which one supplier tells a retailer that the retailer cannot set the retail price of its product higher than that of a rival, even if its wholesale price is higher than that of its rival. Such restraints have been the subject of some litigation already, but I expect that with the increasing use of web based platforms where such restraints are often used, litigation regarding such restraints will increase. This Article illustrates the underlying economic logic behind the anticompetitive effect of vMFNs. I then apply the reasoning to credit cards and finally, using the economic framework developed, explain the economic errors in the Court’s Amex decision. For a more detailed discussion, please see the Carlton and Winter paper referenced herein.
{"title":"The Anticompetitive Effects of Vertical Most-Favored-Nation Restraints and the Error of Amex","authors":"D. Carlton","doi":"10.2139/ssrn.3328628","DOIUrl":"https://doi.org/10.2139/ssrn.3328628","url":null,"abstract":"This Essay explains why the Supreme Court’s economic reasoning in its recent Ohio v. American Express Co. (“Amex”) decision is wrong. The Amex case involved the use of what are called “antisteering” restraints in which a retailer is not allowed to use a variety of tactics to steer a consumer away from using an American Express (“Amex”) card and toward using another payment mechanism. The reason why a merchant might want to do this is because the cost that the merchant incurs when a customer uses an Amex card can be higher than the cost that the merchant incurs when the customer uses either another credit card, debit card, or cash. Although not challenged in the Amex case, the Amex contractual rules also prevent a retailer from imposing a surcharge on customers who use an Amex card to reflect the higher merchant cost. It is interesting to note that some countries—such as Australia—have regulated certain credit card fees, others have forbidden credit card companies from telling merchants that they cannot surcharge, and some states in the United States—such as New York—have forbidden merchants from surcharging. Restraints on surcharging or steering are examples of restraints that Ralph Winter and I call “vertical most-favored-nation restraints,” (“vMFN”) in which one supplier tells a retailer that the retailer cannot set the retail price of its product higher than that of a rival, even if its wholesale price is higher than that of its rival. Such restraints have been the subject of some litigation already, but I expect that with the increasing use of web based platforms where such restraints are often used, litigation regarding such restraints will increase. \u0000This Article illustrates the underlying economic logic behind the anticompetitive effect of vMFNs. I then apply the reasoning to credit cards and finally, using the economic framework developed, explain the economic errors in the Court’s Amex decision. For a more detailed discussion, please see the Carlton and Winter paper referenced herein.","PeriodicalId":416291,"journal":{"name":"IO: Firm Structure","volume":"2 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116445243","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We document substantial variation across startups in whether and when they appoint outside directors, and the type of directors they appoint. The startup-director match depends on professional connections and individual experience profiles. Early-stage investors are more likely to serve as outside directors when there is a local scarcity of directors. Outside directors leverage their professional connections to attract new investors, directors, top executives, and potential acquirers for startups. Overall, presence of an early-stage outside director is associated with better funding outcomes and higher probability of exit through IPO, although presence of an investor-director makes exit via acquisition more likely.
{"title":"Outside Directors at Early-Stage Startups","authors":"Buvaneshwaran Venugopal, Vijay Yerramilli","doi":"10.2139/ssrn.3320010","DOIUrl":"https://doi.org/10.2139/ssrn.3320010","url":null,"abstract":"We document substantial variation across startups in whether and when they appoint outside directors, and the type of directors they appoint. The startup-director match depends on professional connections and individual experience profiles. Early-stage investors are more likely to serve as outside directors when there is a local scarcity of directors. Outside directors leverage their professional connections to attract new investors, directors, top executives, and potential acquirers for startups. Overall, presence of an early-stage outside director is associated with better funding outcomes and higher probability of exit through IPO, although presence of an investor-director makes exit via acquisition more likely.","PeriodicalId":416291,"journal":{"name":"IO: Firm Structure","volume":"25 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-01-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116114608","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Firm versus the Market: Dehomogenizing the Transaction Cost Theories of Coase and Williamson
企业与市场:去同质化科斯和威廉姆森的交易成本理论
{"title":"The Firm vs. the Market: Dehomogenizing the Transaction Cost Theories of Coase and Williamson","authors":"Per L. Bylund","doi":"10.1561/111.00000018","DOIUrl":"https://doi.org/10.1561/111.00000018","url":null,"abstract":"The Firm versus the Market: Dehomogenizing the Transaction Cost Theories of Coase and Williamson","PeriodicalId":416291,"journal":{"name":"IO: Firm Structure","volume":"34 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-01-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123298336","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Moresi and Salop (2013) have extended the “upward pricing pressure” approach used in analyzing horizontal mergers to the analysis of vertical mergers. They present test expressions called the vGUPPIu and vGUPPId to see if the upstream and downstream prices will rise as a result of the merger. This approach has gained acceptance.
In this paper we present the results of Monte Carlo simulations of a vertical merger for a simple setup with one upstream monopolist and two downstream firms. In the simulations, the upstream price paid by the remaining downstream rival can either rise or fall. The downstream price always falls. The downstream rival may exit even when the upstream price falls.
Based on these simulations, we see if the Moresi and Salop formulas predict the directions of price changes correctly. We also derive a variation on the Moresi and Salop formulation, arriving at different vGUPPI formulas. Overall, neither approach does well. Both versions of the vGUPPIu predict upstream price increases, whereas the simulations show many decreases. The merged firm’s downstream price always falls in the simulations. The Moresi and Salop downstream price test is correct 82.1% of the time, whereas the variant is correct 100% of the time.
{"title":"Simulating Vertical Mergers and the Vertical GUPPI Approach","authors":"Gleb B. Domnenko, D. Sibley","doi":"10.2139/ssrn.3447687","DOIUrl":"https://doi.org/10.2139/ssrn.3447687","url":null,"abstract":"Moresi and Salop (2013) have extended the “upward pricing pressure” approach used in analyzing horizontal mergers to the analysis of vertical mergers. They present test expressions called the vGUPPIu and vGUPPId to see if the upstream and downstream prices will rise as a result of the merger. This approach has gained acceptance.<br><br>In this paper we present the results of Monte Carlo simulations of a vertical merger for a simple setup with one upstream monopolist and two downstream firms. In the simulations, the upstream price paid by the remaining downstream rival can either rise or fall. The downstream price always falls. The downstream rival may exit even when the upstream price falls.<br><br>Based on these simulations, we see if the Moresi and Salop formulas predict the directions of price changes correctly. We also derive a variation on the Moresi and Salop formulation, arriving at different vGUPPI formulas. Overall, neither approach does well. Both versions of the vGUPPIu predict upstream price increases, whereas the simulations show many decreases. The merged firm’s downstream price always falls in the simulations. The Moresi and Salop downstream price test is correct 82.1% of the time, whereas the variant is correct 100% of the time.","PeriodicalId":416291,"journal":{"name":"IO: Firm Structure","volume":"89 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126232036","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We develop a theory of blockchain governance. In our model, the proof-of-work system, the most common set of rules for validating transactions in blockchains, creates an industrial ecosystem with specialized suppliers of goods and services. We analyze the interactions between blockchain governance and the market structure of the industries in the blockchain ecosystem. We show that the proof-of-work system may lead to a situation in which some large firms in the blockchain industrial ecosystem—blockchain conglomerates—capture the governance of the blockchain.
{"title":"Corporate Capture of Blockchain Governance","authors":"Daniel Ferreira, Jin Li, Radoslawa Nikolowa","doi":"10.2139/ssrn.3320437","DOIUrl":"https://doi.org/10.2139/ssrn.3320437","url":null,"abstract":"\u0000 We develop a theory of blockchain governance. In our model, the proof-of-work system, the most common set of rules for validating transactions in blockchains, creates an industrial ecosystem with specialized suppliers of goods and services. We analyze the interactions between blockchain governance and the market structure of the industries in the blockchain ecosystem. We show that the proof-of-work system may lead to a situation in which some large firms in the blockchain industrial ecosystem—blockchain conglomerates—capture the governance of the blockchain.","PeriodicalId":416291,"journal":{"name":"IO: Firm Structure","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114412380","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
京公网安备 11010802042870号
京ICP备2023020795号-1
扫码关注我们
求助内容：
应助结果提醒方式：