We examine the effect of an oligopolistic upstream electronic market on upstream and downstream prices. The analysis highlights the two sources of competition that a firm that source from an electronic market (e-market firm) face: competition with less efficient firms that source traditionally (t-market firms) and competition among e-market firms. When size of the upstream e-market is small, th...

Many centralized entry-level labor markets use the firm-proposing deferred-acceptance (DA) algorithm to compute the matching that is implemented among workers and firms. We propose a definition of the strategic options a worker faces in the DA-algorithm. Then we develop a theory to advise workers who distinguish between the firms from which they believe not to receive a proposal, the firms from...

This issue brief describes the ways in which competition between firms can benefit consumers, workers, entrepreneurs, small businesses and the economy more generally, and also describes how these benefits can be lost when competition is impaired by firms’ actions or government policies. Several indicators suggest that competition may be decreasing in many economic sectors, including the decades...

Information asymmetry creates value and incentives for firms from different countries to merge. To demonstrate this point, we develop a model of international trade under oligopolistic competition and asymmetric information, in which domestic firms are informed of the local market demands, but foreign firms are not. By emphasizing two features of a merger between a domestic firm and a foreign f...

business is business! And business must grow –Dr. Seuss, The Lorax The paper investigates the agency argument that sales growth in firms with free cash flow (and without strong governance) is less profitable than sales growth for firms without free cash flow. It also tests whether strong governance conditions improve the performance of firms with free cash flow and/or limit the investments in u...

There is little consensus on the corporate diversification-efficiency relationship in the diversification literature. According to the corporate diversification, firms have a tendency to get more market share with diversifying in the local segment or in the international market. Theoretically, a contradictory exists between the profitable strategy and the value reducing strategy in the diversif...

This study investigates how powerful chief executive officers (CEOs) affect their firm’s environmental performance. Based on a sample of 5222 U.S. firm–year observations, we find that such CEOs positively influence performance and this effect is more prevalent in profitable firms. result suggests are influential creating sufficient resources to enhance firms’ They also typically well establishe...

In modern businesses, firms face new challenges of managerial retention in capital budgeting process. We consider a model in which a manager privately observes the capital productivity of a project and has access to multiple outside financing options. We show that if the manager can obtain funding from either internal or external capital (but not both), the firm may exclude highly profitable in...

Merger Profitability and Trade Policy by Steffen Huck and Kai A. Konrad We study the profitability and welfare effects of merger in a strategic trade policy environment. Merger changes the strategic trade policy equilibrium. We show that merger can be profitable and welfare enhancing here, even though it is not profitable in a laissez-faire economy. A key element is the change in the government...