Bertrand Competition with an Asymmetric No-discrimination Constraint
Jan Bouckaert, Hans Degryse, Theon van Dijk
Journal of Industrial Economics,
Nr. 1,
2013
Abstract
Regulators and competition authorities often prevent firms with significant market power, or dominant firms, from practicing price discrimination. The goal of such an asymmetric no-discrimination constraint is to encourage entry and serve consumers' interests. This constraint prohibits the firm with significant market power from practicing both behaviour-based price discrimination within the competitive segment and third-degree price discrimination across the monopolistic and competitive segments. We find that this constraint hinders entry and reduces welfare when the monopolistic segment is small.
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Regions as Selection Environments? The Emergence of the Solar Industry in Germany from 1992 to 2008
Matthias Brachert, Christoph Hornych, Peter Franz
European Planning Studies,
Nr. 11,
2013
Abstract
The spatial evolution of the German solar industry is analysed in the light of the “window of locational opportunity” and the “selection environment” approach. The paper argues that differences in the regions' ability to promote the emergence of local external economies contribute to increasing regional differentiation in the German structure of the industry. Applied empirical methods enclose longitudinal firm entry and network analysis. A special focus is given upon the realignment processes in the science system. Our findings show a relatively rapid spatial concentration of production in eastern Germany since the year 2000. This process is accompanied by intensified networking between firms and between firms and universities as well as research institutes. The responsiveness of regional institutions and the self-organizing capabilities of the solar firms substantiate some propositions of the “selection environment” approach.
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Foreign Bank Entry, Credit Allocation and Lending Rates in Emerging Markets: Empirical Evidence from Poland
Hans Degryse, Olena Havrylchyk, Emilia Jurzyk, Sylwester Kozak
Journal of Banking and Finance,
Nr. 11,
2012
Abstract
Earlier studies have documented that foreign banks charge lower lending rates and interest spreads than domestic banks. We hypothesize that this may stem from the superior efficiency of foreign entrants that they decide to pass onto borrowers (“performance hypothesis”), but could also reflect a different loan allocation with respect to borrower transparency, loan maturity and currency (“portfolio composition hypothesis”). We are able to differentiate between the above hypotheses thanks to a novel dataset containing detailed bank-specific information for the Polish banking industry. Our findings demonstrate that banks differ significantly in terms of portfolio composition and we attest to the “portfolio composition hypothesis” by showing that, having controlled for portfolio composition, there are no differences in lending rates between banks.
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Determinants of Evolutionary Change Processes in Innovation Networks – Empirical Evidence from the German Laser Industry
Muhamed Kudic, Andreas Pyka, Jutta Günther
Abstract
We seek to understand the relationship between network change determinants, network change processes at the micro level and structural consequences at the overall network level. Our conceptual framework considers three groups of determinants – organizational, relational and contextual. Selected factors within these groups are assumed to cause network change processes at the micro level – tie formations and tie terminations – and to shape the structural network configuration at the overall network level. We apply a unique longitudinal event history dataset based on the full population of 233 German laser source manufacturers and 570 publicly-funded cooperation projects to answer the following research question: What kind of exogenous or endogenous determinants affect a firm’s propensity and timing to cooperate and enter the network? Estimation results from a non-parametric event history model indicate that young micro firms enter the network later than small-sized and large firms. An in-depth analysis of the size effects for medium-sized firms provides some unexpected yet quite interesting findings. The choice of cooperation type makes no significant difference for the firms’ timing to enter the network. Finally, the analysis of contextual determinants shows that cluster membership can, but do not necessarily, affect a firm’s timing to cooperate.
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Size, Productivity, and International Banking
Claudia M. Buch, C. T. Koch, Michael Koetter
Journal of International Economics,
Nr. 2,
2011
Abstract
Heterogeneity in size and productivity is central to models that explain which manufacturing firms export. This study presents descriptive evidence on similar heterogeneity among international banks as financial services providers. A novel and detailed bank-level data set reveals the volume and mode of international activities for all German banks. Only a few, large banks have a commercial presence abroad, consistent with the size pecking order documented for manufacturing firms. However, the relationship between internationalization and productivity also yields two inconsistencies with recent trade models. First, virtually all banks hold at least some foreign assets, irrespective of size or productivity. Second, some fairly unproductive banks maintain commercial presences abroad.
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Mergers, Spinoffs, and Employee Incentives
Paolo Fulghieri, Merih Sevilir
Review of Financial Studies,
Nr. 7,
2011
Abstract
This article studies mergers between competing firms and shows that while such mergers reduce the level of product market competition, they may have an adverse effect on employee incentives to innovate. In industries where value creation depends on innovation and development of new products, mergers are likely to be inefficient even though they increase the market power of the post-merger firm. In such industries, a stand-alone structure where independent firms compete both in the product market and in the market for employee human capital leads to a greater profitability. Furthermore, our analysis shows that multidivisional firms can improve employee incentives and increase firm value by reducing firm size through a spinoff transaction, although doing so eliminates the economies of scale advantage of being a larger firm and the benefits of operating an internal capital market within the firm. Finally, our article suggests that established firms can benefit from creating their own competition in the product and labor markets by accommodating new firm entry, and the desire to do so is greater at the intermediate stages of industry/product development.
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Corporate Governance in the Multinational Enterprise: A Financial Contracting Perspective
Diemo Dietrich, Björn Jindra
International Business Review,
2010
Abstract
The aim of this paper is to bring economics-based finance research more into the focus of international business theory. On the basis of an analytical model that introduces financial constraints into incomplete contracting in an international vertical trade relationship, we propose an integrated framework that facilitates the study of the interdependencies between internalisation decisions, firm-internal allocations of control rights, and the debt capacity of firms. We argue that the financial constraint of an MNE and/or its supplier should be considered as an important determinant of internal governance structures, complementary to, and interacting with, institutional factors and proprietary knowledge.
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Cross-border Exposures and Financial Contagion
Hans Degryse, Muhammad Ather Elahi, Maria Fabiana Penas
International Review of Finance,
Nr. 2,
2010
Abstract
Integrated financial markets provide opportunities for expansion and improved risk sharing, but also pose threats of contagion risk through cross-border exposures. This paper examines cross-border contagion risk over the period 1999–2006. To that purpose we use aggregate cross-border exposures of 17 countries as reported in the Bank for International Settlements Consolidated Banking Statistics. We find that a shock that affects the liabilities of one country may undermine the stability of the entire financial system. Particularly, a shock wiping out 25% (35%) of US (UK) cross-border liabilities against non-US (non-UK) banks could lead to bank contagion eroding at least 94% (45%) of the recipient countries' banking assets. We also find that since 2006 a shock to Eastern Europe, Turkey and Russia affects most countries. Our simulations also reveal that the ‘speed of propagation of contagion’ has increased in recent years resulting in a higher number of directly exposed banking systems. Finally, we find that contagion is more widespread in geographical proximities.
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Barriers to Internationalization: Firm-Level Evidence from Germany
Claudia M. Buch
IAW Discussion Paper No. 52,
2009
Abstract
Exporters and multinationals are larger and more productive than their domestic
counterparts. In addition to productivity, financial constraints and labor market
constraints might constitute barriers to entry into foreign markets. We present new
empirical evidence on the extensive and intensive margin of exports and FDI based on detailed micro-level data of German firms. Our paper has three main findings. First, in line with earlier literature, we find a positive impact of firm size and productivity on firms’ international activities. Second, small firms suffer more frequently from financial constraints than bigger firms, but financial conditions have no strong effect on internationalization. Third, labor market constraints constitute a more severe barrier to foreign activities than financial constraints. Being covered by collective bargaining particularly impedes international activities.
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