This note tests the assumption of dynamic discrete choice models that underlying utility shocks have an extreme value type I distribution. We find that extreme value type I shocks cannot be rejected in most specifications of the Rust (1987) bus engine replacement model.
There are two important rules to patent races: minimal accomplishment necessary to receive the patent and the allocation of the innovation benefits. We study the optimal combination of these rules. A planner, who cannot distinguish between competing firms in a multistage innovation race, chooses the patent rules by maximizing either consumer or social surplus. We show that efficiency cost of prizes is a key consideration. Races are undesirable only when efficiency costs are low, firms are similar, and social surplus is maximized. Otherwise, the optimal policy involves a race of nontrivial duration to spur innovation and filter out inferior innovators.
Ein unternehmensübergreifendes Verständnis von Organisation ist von zentraler Bedeutung. Denn es hat sich gezeigt, dass die Organisation des Unternehmensumfeldes, z. B. Wettbewerbspolitik, und die Organisation an den Grenzen der Unternehmung - z.B. Outsourcing, Kooperationen - erheblichen Einfluss auf den Erfolg und die Gestaltung von Unternehmensstrukturen haben. Das Lehrbuch wurde in der 5. Auflage aktualisiert und ergänzt um die Bereiche ?Dienstleistungs-?Service-Organisation? und ?Organisation von Wertschöpfung?.
We investigate the socially optimal intervention in the global carbon cycle. Limiting factors are (i) increasing atmospheric carbon concentration due to fossil fuel-related carbon emissions, and (ii) the inertia of the global carbon cycle itself. Accordingly, we explicitly include the largest non-atmospheric carbon reservoir, the ocean, to achieve a better representation of the global carbon cycle than the proportional-decay assumption usually resorted to in economic models. We also investigate the option to directly inject CO2 into the deep ocean (a form of carbon sequestration), deriving from this a critical level for ocean sequestration costs. Above this level, ocean sequestration is merely a temporary option; below it, ocean sequestration is the long-term option permitting extended use of fossil fuels. The latter alternative involves higher atmospheric stabilization levels. In this connection it should be noted that the efficiency of ocean sequestration depends on the time-preference and the inertia of the carbon cycle.
We study North–South capital transfer and the diffusion of embodied technologies within a framework of intertemporal global welfare maximization. We show saddle path stability and characterize the steady state. We then examine the transition path by running numerical experiments based on realistic data. As a result, technology diffusion will succeed if the absorptive capacity is sufficient which requires sufficient investment. While a large share of capital is allocated to the South in early periods, this share declines in later periods when the South has caught up in terms of technologies.
Economic crises in the last decades have swept elderly workers more than younger workers out of employment. But now the tide is turning. In affluent societies, elderly workers will have more opportunities of being employed in meaningful and well-paid jobs than ever before. On account of demographic changes, fewer (younger) workers will be around, and most of the reasons that in the past have induced employers to lay off older rather than younger workers will disappear. Future employment strategies will have to focus more on an optimal age mix and on benefitting from the full potential of the elderly.
This paper examines the relationship between brand equity and customer acquisition, retention, and profit margin, the key components of customer lifetime value (CLV). We examine a unique database from the U.S. automobile market that combines 10 years of acquisition rate, retention rate, and customer profitability data with measures of brand equity from Young & Rubicam’s Brand Asset Valuator (BAV) over the same time period. We hypothesize and find that BAV brand equity is significantly associated with the components of CLV in expected and meaningful ways. For example, customer Knowledge of a brand has an especially strong positive relationship with all three components of CLV. Interestingly, however, Differentiation is a double-edged sword. While it is associated with higher customer profitability, it is also associated with lower acquisition and retention rates. We also find that marketing efforts exert indirect impacts on CLV through brand equity. Simulations show that changes in marketing, or exogenous changes in brand equity, can exert important effects on CLV. Overall, the findings suggest the “soft” and “hard” sides of marketing need to be managed in a coordinated fashion. We discuss these and other implications for researchers and practitioners.
