Publication records

This paper analyzes the strategic use of bilateral supply contracts in sequential negotiations between one manufacturer and two differentiated retailers. Allowing for general contracts and retail bargaining power, I show that the first contracting parties have incentives to manipulate their contract to shift rent from the second contracting retailer and these incentives distort the industry profit away from the fully integrated monopoly outcome. To avoid such distortion, the first contracting parties may prefer to sign a contract which has no commitment power and can be renegotiated from scratch should the manufacturer fail in its subsequent negotiation with the second retailer. Renegotiation from scratch induces the first contracting parties to implement the monopoly prices and might enable them to capture the maximized industry profit. A slotting fee, an up-front fee paid by the manufacturer to the first retailer, and a menu of tariff-quantity pairs are sufficient contracts to implement the monopoly outcome. These results do not depend on the type of retail competition, the level of differentiation between the retailers, the order of sequential negotiations, the level of asymmetry between the retailers in terms of their bargaining power vis-à-vis the manufacturer or their profitability in exclusive dealing.

This paper analyzes the welfare implications of buyer mergers, which are mergers between downstream firms from different markets. We focus on the interaction between the merger's effects on downstream efficiency and on buyer power in a setup where one manufacturer with a non-linear cost function sells to two locally competitive retail markets. We show that size discounts for the merged entity has no impact on consumer prices or on smaller retailers, unless the merger affects the downstream efficiency of the merging parties. When the upstream cost function is convex, we find that there are "waterbed effects," that is, each small retailer pays a higher average tariff if a buyer merger improves downstream efficiency. We obtain the opposite results, "anti-waterbed effects," if the merger is inefficient. When the cost function is concave, there are only anti-waterbed effects. In each retail market, the merger decreases the final price if and only if it improves the efficiency of the merging parties, regardless of its impact on the average tariff of small retailers.

 

View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).

The paper integrates and builds on extant thinking in corporate marketing and CSR to provide an identity-based conceptualization of CSR. Based on this, it positions CSR as an optimal managerial tool for promoting alignment between multiple corporate identities (e.g., internal, external), which ultimately leads to key benefits for the company.

With permission of Emerald

In this paper we focus on modeling and predicting the loss distribution for credit risky assets such as bonds and loans. We model the probability of default and the recovery rate given default based on shared covariates. We develop a new class of default models that explicitly account for sector specific and regime dependent unobservable heterogeneity in firm characteristics. Based on the analysis of a large default and recovery data set over the horizon 1980-2008, we document that the specification of the default model has a major impact on the predicted loss distribution, while the specification of the recovery model is less important. In particular, we find evidence that industry factors and regime dynamics affect the performance of default models, implying that the appropriate choice of default models for loss prediction will depend on the credit cycle and on portfolio characteristics. Finally, we show that default probabilities and recovery rates predicted out-of-sample are negatively correlated, and that the magnitude of the correlation varies with seniority class, industry, and credit cycle.

© 2011 INFORMS

Project forms of organizing are theorized to rely upon horizontal as opposed to vertical lines of authority, but few have examined how this shift affects progression-how people advance in an organization. We argue that progression without hierarchy unfolds when people assume lateral authority over project tasks without managing people. With a longitudinal study of a mature, collectively managed open source software project, we predict the individual behaviors that enable progression to lateral authority roles at two different stages. Although technical contributions are initially important, coordination work is more critical at a subsequent stage. We then explore how lateral authority roles affect subsequent behavior-after gaining authority, individuals spend significantly more time coordinating project work. Our research shows how people progress to the center as opposed to up a hierarchy, and how progression differs by stage and specifies the theoretical relationship between lateral authority roles and the coordination of project work.

© 2011 INFORMS

We study the prices individual banks pay for liquidity (captured by borrowing rates in repos with the central bank and benchmarked by the overnight index swap) as a function of market conditions and bank characteristics. These prices depend in particular on the distribution of liquidity across banks, which is calculated over time using individual bank level data on reserve requirements and actual holdings. Banks pay more for liquidity when positions are more imbalanced across banks, consistent with the existence of short squeezing. We also document that small banks pay more for liquidity and are more vulnerable to squeezes. Healthier banks pay less, but contrary to what one might expect, banks in formal liquidity networks do not. State guarantees reduce the price of liquidity, but do not protect against squeezes.

With permission of Elsevier