|Knowledge Spillovers, Congestion Effects, and Long-Run Location Patterns|
We introduce an evolutionary two-country model to characterize long run location patterns of the manufacturing activities of competing multinational enterprises. Firms located in country 1 can decide to offshore their manufacturing activities to country 2. The profitability of production in a country depends on several factors: unitary costs of production, the number of firms that are located in each country, within-country spillovers, and cross-border spillovers. Furthermore, profits in country 2 are influenced by congestion costs. Country 1 is assumed to be technologically advanced and has an advantage in terms of internal spillovers. In contrast, country 2 offers lower production unit cost which, however, may be offset by congestion costs. The firms’ (re)location choices are based on a simple comparison of current production costs obtained in the two countries and the dynamics of switching is modeled by a simple replicator dynamics. The global analysis of the resulting one-dimensional dynamical system reveals that a large advantage in terms of unitary production costs encourages the firms to off-shore manufacturing activities to country 2. This off-shoring process stops when congestion costs offset this advantage of country 2, even though congestion costs do not cause all manufacturing activities to be re-shored to country 1. The re-shoring process can be accelerated by an increase of within-country spillovers in country 1, while cross-border spillovers tend to favor a geographic dispersion of manufacturing activities and make location patterns that lead to suboptimal long run outcomes less likely.
Bischi, G. I., Kopel, M., Lamantia, F. und Radi, D. (2018): Knowledge Spillovers, Congestion Effects, and Long-Run Location Patterns, in: Commendatore, P., Kubin, I., Bougheas, S., Kirman, A., Kopel, M. und Bischi, G. I. (Hrsg.): The Economy as a Complex Spatial System. Macro, Meso and Micro Perspectives, Springer Proceedings on Complexity, Wiesbaden, S. 192-215, doi: https://doi.org/10.1007/978-3-319-65627-4_11.
Kontakt: Michael Kopel, Institut für Organisation und Institutionenökonomik, Tel.: 0316/380 - 7182
|Can hierarchy hold back the dynmics of self-reinforcing processes? A simulation study on path dependence in hierarchies|
Theories of path dependence and incumbent inertia assume that self-reinforcing mechanisms lead to highly persistent and eventually inefficient institutional solutions. The resulting lock-in is likely to threaten the viability of an organization. While path dependence theory was initially developed as a market-based approach, it has more recently been transferred to institutional settings and in particular to hierarchies. Some critics doubt, however, its applicability to hierarchical organizations. The major argument states that asymmetric power structures in organizations differ significantly from symmetric coordination modes and autonomous evolutionary dynamics. Hierarchical authority is assumed to be stronger and to rule out emergent autonomous dynamics. This reasoning raises the question whether hierarchical structures are actually strong enough to suppress (deliberately) the power of evolutionary self-reinforcing organizational dynamics, or vice versa. To our knowledge, there are no studies to date examining in detail these reverse dynamics. In this paper, we build on simulations to study these competing dynamics and possible conditions that favor one view or the other. We suggest using agent-based simulation and modeling, conceiving of institutional change as an interdependent multi-level process that can be analyzed numerically. The results indicate that in most situations self-reinforcing organizational dynamics can actually overrule hierarchical authority, whilst in some other situations formal authority proves to be stronger.
Petermann, A., Schreyögg, G. und Fürstenau, D. (2019): Can hierarchy hold back the dynamics of self-reinforcing processes? A simulation study on path dependence in hierarchies, in: Business Research, pp. 1-33, doi: doi.org/10.1007/s40685-019-0083-9 [23.01.2019].
|How followers’ emotional stability and cultural value orientations moderate the impact of health-promoting leadership and abusive supervision on health-related resources|
Health-related resources at work are crucial for followers to stay fit and cope with stress. This study investigates the impact of leadership behavior on followers’ resources as antecedents of their health. It thereby takes follower characteristics (emotional stability) and cultural aspects (power distance/collectivism) into account. A total of 503 employees from Austria, Germany and Slovenia took part in this study and provided information on their leaders’ health-promoting behaviour and abusive supervision as well as on their own emotional stability, perceived power distance and collectivism. The results suggest that followers differently benefit from or suffer under perceived leadership: high power distance enhances the positive effect of health-promoting leadership on follower resources, while collectivism strengthens the negative impact of abusive supervision on the same resources. Emotionally stable followers who are working with highly abusive leaders experience the strongest threat to their health resources. In brief, this study contributes to a deeper understanding of how leaders impact those resources known to influence followers’ health.
Bregenzer, A., Felfe, J., Bergner, S. und Jimenez, P. (2019): How followers’ emotional stability and cultural value orientations moderate the impact of health-promoting leadership and abusive supervision on health-related resources, in: German Journal of Human Resource Management, pp. 1-30, doi: doi.org/10.1177/2397002218823300 [02.02.2019].
Kontakt: Sabine Bergner, Institut für Unternehmensführung und Entrepreneurship, Tel.: 0316/380 - 7359
|Why Do Markets Change? Some Conventionalist Considerations on the Stability and Dynamic of Markets|
This paper wants to develop a dynamic approach of markets. We take the economics of conventions (EC) as the basic theoretical framework and expand it regarding concepts, which help to answer the question under which circumstances markets are either (persistently) stable or (radically) dynamic. We introduce EC as a European research program focusing on uncertainty as the fundamental problem on markets. Then we develop the concept of market regimes to draw on some main pillars of the EC and at the same time to focus attention more, as it is usually the case, on the question why conventions are stable and why they change. We argue that usually markets are relatively stable; however, crises, exogenous factors, and divergent interpretations of quality on the individual level (dissatisfaction/critique of key actors) lead to change of conventions and consequently changing market regimes. Analytically, the existing regime fails to overcome uncertainty and establish market coordination. The empirical part of the paper illustrates the theoretical concepts with the case of a regional wine market where radical change led to the fall of the market convention and the rise of the domestic convention.
Jakelja, L. und Brugger, F. (2019): Why Do Markets Change? Some Conventionalist Considerations on the Stability and Dynamic of Markets, in: Historical Social Research, Vol. 44, No. 1, pp. 160-187, doi: 10.12759/hsr.44.2019.1.160-187.
|The anti-paradox of cooperation: Diversity may pay!|
This paper considers the stability and success of a public good agreement. We allow for any type and degree of asymmetry regarding benefits and costs. We ask the question whether asymmetry and which type and degree of asymmetry is conducive to cooperation? We employ a simple non-cooperative game-theoretic model of coalition formation and derive analytical solutions for two scenarios: an agreement without and with optimal transfers. A central message of the paper is that asymmetry does not have to be an obstacle for successful cooperation but can be an asset. We qualify two central results in the literature. Firstly, the paradox of cooperation, known since Barrett (1994) and reiterated by many others afterwards, stating that under those conditions when cooperation would matter most, stable agreements achieve only little. Secondly, a kind of “coalition folk theorem”, known (without proof) in the literature for a long time, stating that without transfers, stable coalitions will be smaller with asymmetric than symmetric players. We show that even without transfers the grand coalition can be stable if there is a negative covariance between benefit and cost parameters with massive gains from cooperation. Moreover, with transfers, many distributions of benefit and cost parameters lead to a stable grand coalition, again, some of them implying huge gains from cooperation. Stability and success greatly benefit from a very skewed asymmetric distribution of benefit and costs, i.e., diversity may pay!
Finus, M. und McGinty, M. (2019): The anti-paradox of cooperation: Diversity may pay!, in: Journal of Economic Behavior & Organization, Vol. 157, pp. 541–559, doi: doi.org/10.1016/j.jebo.2018.10.015.
|A note on “Renegotiation in repeated games”|
In Renegotiation in Repeated Games (1989), J. Farrell and E. Maskin present, among other results, sufficient conditions for payoffs to be “weakly renegotiation-proof”. We show that a step in the corresponding proof is not correct by giving a counterexample. We then provide a correct proof with slightly more demanding sufficient conditions.
Günther, M., Kuzmics, C. und Salomon, A. (2019): A note on “Renegotiation in repeated games”, in: Games and Economic Behavior, Vol. 114, pp. 318-323, doi: https://doi.org/10.1016/j.geb.2019.01.002.
|Debt Restructuring: When Do Loan and Bond Prepayments Pay Off?|
For ten years interest rates in the Eurozone have been declining. This has created a situation where loan or bond prepayments and subsequent refinancing transactions are potentially beneficial for debtors. The advantageousness depends on the costs induced. We analyze the favorability of debt restructuring using the method of differential investment and provide critical limits for the nominal interest rate of the new loan up to which prepayment is optimal. The calculations address both fixed and variable rate loans and consider whether the debt agreement is repaid at maturity or in annuities.
Fischer, E. O. und Wöckl, I. (2019): Debt Restructuring: When Do Loan and Bond Prepayments Pay Off?, in: Journal of Banking and Financial Research (BankArchiv), Vol. 67, No. 1, pp. 39-49. doi: dx.doi.org/10.2139/ssrn.3225608.
|Effects of Increasing Enforcement on Financial Reporting Quality and Audit Quality|
A widely held assumption in policy making and empirical research is that increasing the strength of public enforcement improves financial reporting quality and audit quality. This paper provides a more nuanced view. In a model with a manager who can manage earnings, a strategic auditor, and an enforcement institution, we show that enforcement and auditing are complements in a weak enforcement regime but can be substitutes in a strong regime. Although stronger enforcement always mitigates earnings management, the effects of different instruments of strengthening enforcement are ambiguous. We show that they can improve or impair financial reporting quality and audit quality, depending on production risk, accounting system characteristics, and the scope of auditing relative to enforcement.
Ewert, R. und Wagenhofer, A. (2019): Effects of Increasing Enforcement on Financial Reporting Quality and Audit Quality, in: Journal of Accounting Research, Vol 57, No. 1, pp. 121-168, doi: 10.1111/1475-679X.12251.
Kontakt: Ralf Ewert, Institut für Unternehmensrechnung und Wirtschaftsprüfung, Tel.: 0316/380 - 7168 und Alfred Wagenhofer, Institut für Unternehmensrechnung und Controlling, Tel.: 0316/380 - 3500
|Kompetenzorientierter Unterricht: Theoretische Grundlagen – erprobte Praxisbeispiele|
Die Bildungsdebatten der letzten Jahre haben, verstärkt durch internationale Schulleistungsstudien wie PISA oder TIMSS, den Blick auf die Ergebnisse von Lern- und Bildungsprozessen gelenkt, insbesondere im Spiegel des Kompetenzerwerbs. Die AutorInnen stellen konkrete Unterrichtsmethoden und -beispiele vor, die Lehramtsstudierende sowie Lehrerinnen und Lehrer bei der Durchführung kompetenzorientierten Unterrichts unterstützen.
Fritz, U., Lauermann, K., Paechter, M., Stock, M. und Weirer, W. (Hrsg.) (2019): Kompetenzorientierter Unterricht: Theoretische Grundlagen – erprobte Praxisbeispiele, Verlag Barbara Budrich GmbH, Leverkusen.
|Stable and Pareto Optimal Group Activity Selection From Ordinal Preferences|
In several situations agents need to be assigned to activities on basis of their preferences, and each agent can take part in at most one activity. Often, the preferences of the agents do not depend only on the activity itself but also on the number of participants in the respective activity. In the setting we consider, the agents hence have preferences over pairs “(activity, group size)” including the possibility “do nothing”; in this work, these preferences are assumed to be strict orders. The task will be to find stable assignments of agents to activities, for different concepts of stability such as Nash or core stability, and Pareto optimal assignments respectively. In this respect, particular focus is laid on two natural special cases of agents’ preferences inherent in the considered model, namely increasing and decreasing preferences, where agents want to share an activity with as many (as few, respectively) agents as possible.
Darmann, A. (2018): Stable and Pareto Optimal Group Activity Selection From Ordinal Preferences, in: International Journal of Game Theory, Vol. 47, No. 4, pp. 1183-1209, doi: link.springer.com/article/10.1007%2Fs00182-018-0612-3.
Kontakt: Andreas Darmann, Institut für Finanzwissenschaft und Öffentliche Wirtschaft, Tel.: 0316/380 - 7139
|Preferences under Ignorance|
A decision maker (DM) makes choices from different sets of alternatives. The DM is initially ignorant of the payoff associated with each alternative and learns these payoffs only after a large number of choices have been made. We show that, in the presence of an outside option, once payoffs are learned, the optimal choice rule from sets of alternatives can be rationalized by a DM with strict preferences over all alternatives. Under this model, the DM has preferences for preferences while being ignorant of what preferences are “right.”
Gossner, O. und Kuzmics, C. (2019): Preferences under Ignorance, in: International Economic Review, Vol. 60, No. 1, pp. 241-257, doi: 10.1111/iere.12351.
|Österreich, Europa und die Welt. Internationale Beziehungen im 20. und 21. Jahrhundert|
Anhand ausgewählter Beispiele beleuchtet der Sammelband die Prozesshaftigkeit von Geschichte aus österreichischer Perspektive: Es geht um innen- und außenpolitische Entwicklungen seit 1918, vor allem aber auch um die Positionierung und Rolle der Republik Österreich in Europa und in der Welt. Expertinnen und Experten aus den Bereichen Geschichte, Rechtswissenschaften, Ökonomie, Demographie und Entwicklungspolitik spannen mit ihren Aufsätzen einen weiten Bogen: von den letzten Jahren der Habsburgermonarchie, den Krisen der Zwischenkriegszeit und dem Ende Österreichs durch den „Anschluss“ 1938 über die Rolle der neutralen Alpenrepublik im Kalten Krieg, ihren Weg in die EU und ihre Bedeutung im Kontext einer (gesamt)europäischen Außenpolitik bis hin zur jüngsten Schulden-, Euro- und Finanzkrise und schließlich zur Rolle Österreichs in der internationalen Entwicklungszusammenarbeit und in internationalen Organisationen.
Iber, W. M. und Teibenbacher, P. (Hrsg.) (2019): Österreich, Europa und die Welt. Internationale Beziehungen im 20. und 21. Jahrhundert, Reihe: Wissenschaft kompakt: Wirtschaft, Gesellschaft, Politik. Schriften des Instituts für Wirtschafts-, Sozial- und Unternehmensgeschichte an der Karl-Franzens-Universität Graz, Band 1, LIT Verlag, Münster.
Kontakt: Walter M. Iber, Institut für Wirtschafts-, Sozial- und Unternehmensgeschichte, Tel.: 0316/380 - 3529
|Algorithmic trading and liquidity: Long term evidence from Austria|
We analyze the relation between algorithmic trading and liquidity using a novel data set from the Austrian equity market. Our sample covers almost 4.5 years, it identifies the market share of algorithmic trading at the stock-day level, and it comes from a market that has hitherto not been analyzed. We address the endogeneity problem using an instrumental variables approach. Our results indicate that an increase in the market share of algorithmic trading causes a reduction in quoted and effective spreads while quoted depth and price impacts are unaffected. They are consistent with algorithmic traders on average acting as market makers.
Mestel, R., Murg, M. und Theissen, E. (2018): Algorithmic trading and liquidity: Long term evidence from Austria, in: Finance Research Letters, Vol. 26, pp. 198-203, doi: doi.org/10.1016/j.frl.2018.01.004.
|Strategic management of product and brand extensions: Extending corporate brands in B2B vs. B2C markets|
Decisions about expanding an existing product portfolio and capturing new markets are of critical importance to a firm’s financial performance and growth. Yet, important questions remain in regard to the extent to which product and brand extensions contribute to a firm’s profit in B2B and B2C markets, respectively, and how firms with corporate brands in these markets should pursue an extension strategy that provides maximum impact on firm profit. The authors theorize and empirically address these questions based on a study of firms listed in the U.S. Fortune 500 published ranking. Findings of this research have important prescriptive implications for the management of B2B and B2C firms’ growth-based extension strategy and contribute to B2B theory.
Liu, Y., Foscht, T., Eisingerich, A. B. und Tsai, H.-T. (2018): Strategic management of product and brand extensions: Extending corporate brands in B2B vs. B2C markets, in: Industrial Marketing Management, Vol. 71, pp. 147-159, doi: doi.org/10.1016/j.indmarman.2017.12.016.
|Integer optimization with penalized fractional values: The Knapsack case|
We consider integer optimization problems where variables can potentially take fractional values, but this occurrence is penalized in the objective function. This general situation has relevant examples in scheduling (preemption), routing (split delivery), cutting and telecommunications, just to mention a few. However, the general case in which variables integrality can be relaxed at cost of introducing a general penalty was not discussed before. As a case study, we consider the possibly simplest combinatorial optimization problem, namely the classical Knapsack Problem. We introduce the Fractional Knapsack Problem with Penalties (FKPP), a variant of the knapsack problem in which items can be split at the expense of a penalty depending on the fractional quantity. We analyze relevant properties of the problem, present alternative mathematical models, and analyze their performance from a theoretical viewpoint. In addition, we introduce a Fully Polynomial Time Approximation Scheme for the approximate solution of the general problem, and an improved dynamic programming approach that computes the optimal solution in one relevant case. We computationally test the proposed models and algorithms on a large set of instances derived from benchmarks from the literature.
Malaguti, E., Monaci, M., Paronuzzi, P. und Pferschy, U. (2019): Integer optimization with penalized fractional values: The Knapsack case, in: European Journal of Operational Research, Vol. 273, No. 3, pp. 874-888, doi: doi.org/10.1016/j.ejor.2018.09.020.
|Capacity Planning Under Uncertainty and the Cost of Capital|
We explore how risk aversion affects optimal capacity and pricing decisions within the economic setting of Banker and Hughes (1994). A risk-averse firm invests in fixed capacity and sets a product price, but can also purchase spot capacity at higher unit cost. Initial capacity and price are set by maximizing the firm’s mean-variance certainty equivalent. We find that, contrary to common intuition, optimal capacity or list prices can increase under greater risk aversion depending on exogenous fundamentals. We show how the firm’s capacity and price choices affect the economic trade-off between the mean and the risk of the firm’s uncertain payoffs. We also show that the cost of capital is affected not only by the firm’s covariance with other assets, but also by its payoff mean. The objective of minimizing the cost of capital is, therefore, fundamentally inconsistent with maximizing project value.
Johnstone, D. und Wagenhofer, A. (2018): Capacity Planning Under Uncertainty and the Cost of Capital, in: Journal of Management Accounting Research, Vol. 30, No. 3, pp. 169-185, doi: 10.2308/jmar-51859.
|Forecasting the joint distribution of Australian electricity prices using dynamic vine copulae|
We consider the problem of modelling and forecasting the distribution of a vector of prices from interconnected electricity markets using a flexible class of drawable vine copula models, where we allow the dependence parameters of the constituting bivariate copulae to be time-varying. We undertake in-sample and out-of-sample tests using daily electricity prices, and evidence that our model provides accurate forecasts of the underlying distribution and outperforms a set of competing models in their abilities to forecast one-day-ahead conditional quantiles of a portfolio of electricity prices. Our study is conducted in the Australian National Electricity Market (NEM), which is the most efficient power auction in the world. Electricity prices exhibit highly stylised features such as extreme price spikes, price dependency between regional markets, correlation asymmetry and non-linear dependency. The developed approach can be used as a risk management tool in the electricity retail industry, which plays an integral role in the apparatus of modern energy markets. Electricity retailers are responsible for the efficient distribution of electricity, while being exposed to market risk with extreme magnitudes.
Manner, H., Alavi Fard, F., Pourkhanali, A. und Tafakori, L. (2019): Forecasting the joint distribution of Australian electricity prices using dynamic vine copulae, in: Energy Economics, Vol. 78, pp. 143-164, doi: doi.org/10.1016/j.eneco.2018.10.034.
|Macroeconomic implications of switching to process-emission-free iron and steel production in Europe|
Climate change is one of the most serious threats to the human habitat. The required structural change to limit anthropogenic forcing is expected to fundamentally change daily social and economic life. The production of iron and steel is a special case of economic activities since it is not only associated with combustion but particularly with process emissions of greenhouse gases which have to be dealt with likewise. Traditional mitigation options of the sector like efficiency measures, substitution with less emission-intensive materials, or scrap-based production are bounded and thus insufficient for rapid decarbonization necessary for complying with long-term climate policy targets. Iron and steel products are basic materials at the core of modern socio-economic systems, additionally being essential also for other mitigation options like hydro and wind power. Therefore, a system-wide assessment of recent technological developments enabling almost complete decarbonization of the sector is substantially relevant. Deploying a recursive-dynamic multi-region multi-sector computable general equilibrium approach, we investigate switches from coke-to hydrogen-based iron and steel technologies in a scenario framework where industry decisions (technological choice and timing) and climate policies are misaligned. Overall, we find that the costs of industry transition are moderate, but still ones that may represent a barrier for implementation because the generation deciding on low-carbon technologies and bearing (macro)economic costs might not be the generation benefitting from it. Our macroeconomic assessment further indicates that anticipated bottom-up estimates of required additional domestic renewable electricity tend to be overestimated. Relative price changes in the economy induce electricity substitution effects and trigger increased electricity imports. Sectoral carbon leakage is an imminent risk and calls for aligned course of action of private and public actors.
Mayer, J., Bachner, G. und Steininger, K. W. (2019): Macroeconomic implications of switching to process-emission-free iron and steel production in Europe, in: Journal of Cleaner Production, Vol. 210, pp. 1517-1533, doi: doi.org/10.1016/j.jclepro.2018.11.118.