In the Hamadryas baboon, males are substantially larger than females. A troop of baboons is subdivided into a number of ‘one-male groups’, consisting of one adult male and one or more females with their young. The male prevents any of ‘his’ females from moving too far from him. Kummer (1971) performed the following experiment. Two males, A and B, previously unknown to each other, were placed in a large enclosure. Male A was free to move about the enclosure, but male B was shut in a small cage, from which he could observe A but not interfere. A female, unknown to both males, was then placed in the enclosure. Within 20 minutes male A had persuaded the female to accept his ownership. Male B was then released into the open enclosure. Instead of challenging male A , B avoided any contact, accepting A’s ownership.

Evolution and the Theory of Games

https://web.stanford.edu/~johntayl/Papers/ISOM+revised+(EER).pdf

Low inflation, pass-through, and the pricing power of firms

For some, it is an article of faith that governmentowned firms must be less efficient or, at least, less profitable than privately owned firms. Maxim Boycko et al. (1996) argue that politicians cause government-owned firms to employ excess labor inputs. Anne O. Krueger (1990) suggests that such firms may be pressured to hire politically connected people rather than those best qualified to perform desired tasks. More generally, government-owned firms are thought to forgo maximum profit in the pursuit of social and political objectives, such as wealth redistribution. In addition, the residual cash flow claims of these firms are not readily transferable like the shares of a private corporation. This impairs residual claimant incentives to monitor managers and, ultimately, degrades firm performance. As a consequence, one expects government-owned firms to be technically less efficient and, therefore, less profitable than private firms. The implication is that in competitive markets without significant externalities private ownership is the superior organizational form. The view that government firms are inherently less efficient than private ones, however, remains controversial among economists. John Vickers and George Yarrow (1991), among others, point out that agency problems arise in private firms as well as public ones. In most large private corporations managers own little of the stock. Because monitoring managers is costly, a divergence arises between their objectives and those of private shareholders. Private shareholders typically hold a small stake in any one firm and it may not pay any shareholder to bear the cost of monitoring management. It follows from this discussion that whether government firms are more or less efficient than private firms is primarily an empirical issue. To date the body of empirical evidence is mixed. In this paper, we report further empirical evidence on the relative efficiency of public and private enterprises. We build on previous work by studying larger samples over longer time periods and by allowing for additional factors that influence firm performance. In particular, our analysis controls for time-series variation in the general level of economic activity that may otherwise confound performance comparisons between government and private firms. 2 We approach the issue in two different ways. First, using accounting numbers, we conduct a large-sample cross-sectional comparison of government-owned and privately owned corporations. This comparison is similar in design to that of Boardman and Vining (1989), but our sample is three times the size of theirs and includes three

State-Owned and Privately Owned Firms: An Empirical Analysis of Profitability, Leverage, and Labor Intensity

A substantial number of people exhibit social preferences, which means they are not solely motivated by material self-interest but also care positively or negatively for the material payoffs of relevant reference agents. We show empirically that economists fail to understand fundamental economic questions when they disregard social preferences, in particular, that without taking social preferences into account, it is not possible to understand adequately (i) effects of competition on market outcomes, (ii) laws governing cooperation and collective action, (iii) effects and the determinants of material incentives, (iv) which contracts and property rights arrangements are optimal, and (v) important forces shaping social norms and market failures.

/pdf/why-social-preferences-matter-the-impact-of-non-selfish-5g6wozlwk1.pdf

Why Social Preferences Matter - The Impact of Non-Selfish Motives on Competition, Cooperation and Incentives

Over the past decades financial investment of non-financial businesses has been rising and accumulation of capital goods has been declining. The first part of the paper offers a novel theory to explain this phenomenon. Financialization, the shareholder revolution and the development of a market for corporate control have shifted power to shareholders and thus changed management priorities, leading to a reduction in the desired growth rate. In the second part the link between accumulation and financialization is tested econometrically by means of a time series analysis of aggregate business investment for USA, UK, France, and Germany. Extensive test of robustness are performed. For the first three countries evidence that confirms the negative effect of financialization on accumulation is found. (author's abstract)

Financialisation and the slowdown of accumulation

The recent growth pattern of India is set in the context of the parallel experience of China, the experience of poverty reduction is reviewed, and a number of papers illuminating India's development are introduced.

India's development in the era of growth

This paper uses a laboratory experiment to study the effect of the monitoring structure on the play of the infinitely repeated prisoner's dilemma. Keeping the strategic form of the stage game fixed, we examine the behavior of subjects when information about past actions is perfect (perfect monitoring), noisy but public (public monitoring), and noisy and private (private monitoring). We find that the subjects sustain cooperation in every treatment, but that their strategies differ across the three treatments. Specifically, the strategies under imperfect monitoring are both more complex and more lenient than those under perfect monitoring. The results show how the changes in strategies across monitoring structures mitigate the effect of noise in monitoring on efficiency.

/pdf/the-impact-of-monitoring-in-infinitely-repeated-games-23o5ksd7ta.pdf

The Impact of Monitoring in Infinitely Repeated Games: Perfect, Public, and Private

Using Hotelling's model of locational competition, we show that a moderate price-floor destroys the maximal differentiation equilibrium, resulting in minimum differentiation. Equilibrium prices are lower than prices in the absence of a floor. A low price-floor can lead to multiple equilibria, with both minimum and maximum differentiation as possible outcomes.

The competitive effects of price-floors

We analyse the dynamics of public and private sector employment in Bangladesh, using the natural experiment provided by the partial privatization of the jute industry. The public sector had substantial excess employment of workers initially, but this excess was substantially eroded by the end of the period we studied. The extent of erosion differs between white-collar and manual worker categories, with excess employment persisting only in the former. Our findings suggest that partial privatization increases the efficacy of yardstick competition in the regulation of public firms, because heterogeneous ownership undermines collusion between public sector managers, and also makes excess employment more transparent to the general public.

/pdf/partial-privatization-and-yardstick-competition-4xus76wbfi.pdf

Venkataraman Bhaskar

Papers

India's development in the era of growth

The Impact of Monitoring in Infinitely Repeated Games: Perfect, Public, and Private

The competitive effects of price-floors

Partial privatization and yardstick competition

Quick responses in duopoly ensure monopoly pricing