This paper surveys research on corporate governance, with special attention to the importance of legal protection of investors and of ownership concentration in corporate governance systems around the world.

A Survey of Corporate Governance

This article surveys research on corporate governance, with special attention to the importance of legal protection of investors and of ownership concentration in corporate governance systems around the world. CORPORATE GOVERNANCE DEALS WITH the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment. How do the suppliers of finance get managers to return some of the profits to them? How do they make sure that managers do not steal the capital they supply or invest it in bad projects? How do suppliers of finance control managers? At first glance, it is not entirely obvious why the suppliers of capital get anything back. After all, they part with their money, and have little to contribute to the enterprise afterward. The professional managers or entrepreneurs who run the firms might as well abscond with the money. Although they sometimes do, usually they do not. Most advanced market economies have solved the problem of corporate governance at least reasonably well, in that they have assured the flows of enormous amounts of capital to firms, and actual repatriation of profits to the providers of finance. But this does not imply that they have solved the corporate governance problem perfectly, or that the corporate governance mechanisms cannot be improved. In fact, the subject of corporate governance is of enormous practical impor

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Wireless Communications

A Course in Game Theory presents the main ideas of game theory at a level suitable for graduate students and advanced undergraduates, emphasizing the theory's foundations and interpretations of its basic concepts. The authors provide precise definitions and full proofs of results, sacrificing generalities and limiting the scope of the material in order to do so. The text is organized in four parts: strategic games, extensive games with perfect information, extensive games with imperfect information, and coalitional games. It includes over 100 exercises.

A Course in Game Theory

Does finance affect economic growth? A number of studies have identified a positive correlation between the level of development of a country's financial sector and the rate of growth of its per capita income. As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. This paper examines whether financial development facilitates economic growth by scrutinizing one rationale for such a relationship; that financial development reduces the costs of external finance to firms. Specifically, we ask whether industrial sectors that are relatively more in need of external finance develop disproportionately faster in countries with more developed financial markets. We find this to be true in a large sample of countries over the 1980s. We show this result is unlikely to be driven by omitted variables, outliers, or reverse causality.

/pdf/financial-dependence-and-growth-2meheeba1z.pdf

Financial Dependence and Growth

The authors modify the standard principal-agent model with oral hazard by allowing the contract to be renegotiated after the agent's choice of action and before the observation of the action's consequences. In equilibrium, the agent randomizes over effort levels. The optimal contract gives the agent a menu of compensation schemes: safe ones intended for low-effort workers and risky ones for those whose effort is high. The optimal contract may give the agent a positive rent, in contrast to the case without renegotiation. Copyright 1990 by The Econometric Society. (This abstract was borrowed from another version of this item.)

Moral Hazard and Renegotiation in Agency Contracts

We examine the performance attributes of a merchant transmission investment framework that relies on ‘market driven’ transmission investment to provide the infrastructure to support competitive wholesale markets for electricity. Under a stringent set of assumptions, the merchant investment model appears to solve the natural monopoly problem and the associated need for regulating transmission companies traditionally associated with electric transmission networks. We expand the model to incorporate imperfection in wholesale electricity markets, lumpiness in transmission investment opportunities, stochastic attributes of transmission networks and associated property rights definition issues, the effects of the behaviour system operators and transmission owners on transmission capacity and reliability, co-ordination and bargaining considerations, forward contract, commitment and asset specificity issues. This significantly undermines the attractive properties of the merchant investment model. Relying primarily on a market driven investment framework to govern investment is likely to lead to inefficient investment decisions and undermine the performance of competitive markets.

Merchant Transmission Investment

Traditional innovative efforts result in intellectualproperty and results that are controlled by private firms. In contrast,open-source projects yield data that is available for public use with certainrestrictions. Individuals and for-profit firms who contribute to open-sourceprojects must make their improvements to the original project known andavailable to the public. This research investigates the impact of offerings to open source softwareprojects. A literature review discusses issues regarding contributions tosoftware, as well as the economic motivations behind open-source contributions.A panel data set, consisting of approximately 100 open source projects, wascompiled from information garnered from SourceForge, press searches, andproject websites. The number of different references to each individual involved in eachrespective project was tabulated. Individual contributors were furtherdifferentiated into five categories, based upon whether their contribution wasdone on their own behalf or as a function of their employment.Determinedby their email addresses, the contributor's categories included corporateemployees, individual hobbyists, unidentified international contributors,non-profit employees, and technical website contributors. The researchers indicate that this study acts as an initial examination ofthe time series patterns of open source contributions, with the resultsindicating that the distribution of corporate contributions tends to be moresubstantialin large, growing projects. (AKP)

The Dynamics of Open Source Contributors

Compléter l'euro

The paper introduces a class of alternating-move infinite-horizon models of duopoly. The timing is meant to capture the presence of short-run commitments. Markov perfect equilibrium (MPE) in this context requires strategies to depend only on the action to which one's opponent is currently committed. The dynamic programming equations for an MPE are derived. The first application of the model is to a natural monopoly, in which fixed costs are so large that at most one firm can make a profit. The firms install short-run capacity. In the unique symmetric MPE, only one firm is active and practices the quantity analogue of limit pricing. For commitments of brief duration, the market is almost contestable. We conclude with a discussion of more general models in which the alternating timing is derived rather than imposed. Our companion paper applies the model to price competition and provides equilibrium foundations for kinked demand curves and Edgeworth cycles.

Jean Tirole

Papers

Moral Hazard and Renegotiation in Agency Contracts

Merchant Transmission Investment

The Dynamics of Open Source Contributors

Compléter l'euro

Quantity competition with large fixed costs