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

We consider a society where parents prefer boys to girls, but also value grandchildren. Parental sex selection results in a biased sex ratio that is socially inefficient, due to a congestion externality in the marriage market. Improvements in selection techniques aggravate the inefficiency. These results are robust to allowing prices in the marriage market, if the market is subject to frictions. We extend the model to consider gender preferences which depend upon family composition, allowing us to examine the possible sex ratio effects of China's one-child policy, and the implications of choice in societies where family balancing considerations are paramount.

/pdf/parental-sex-selection-and-gender-balance-1ms2yjqmrj.pdf

Parental sex selection and gender balance

We present international evidence on the marriage market implications of cohort size growth, and set out a theoretical model of how marriage markets adjust to imbalances. Since men marry younger women, secular growth in cohort size worsens the position of women. This effect has been substantial in many Asian countries, and in sub-Saharan Africa. Secular decline in cohort sizes, as is happening in East Asia, improves the position of women. We show that the age gap at marriage will not adjust in order to equilibrate the marriage market in response to persistent imbalances, even though it accommodates transitory shocks. This is true under transferable utility even if age preferences are relatively minor, as well as under non-transferable utility. We examine the distributional consequences on the sexes, and on dowry payments.

The Demographic Transition and the Position of Women: A Marriage Market Perspective

We consider a society where parents prefer boys to girls, but also value grandchildren Parental sex selection results in a biased sex ratio that is socially inefficient, due to a congestion externality in the marriage market Improvements in selection techniques aggravate the inefficiency These results are robust to allowing prices in the marriage market, if the market is subject to frictions We extend the model to consider gender preferences which depend upon family composition, allowing us to examine the possible sex ratio effects of China's one-child policy, and the implications of choice in societies where family balancing considerations are paramount

Parental Sex Selection and Gender Balance

We analyze models of product differentiation with perfect price discrimination and free entry. Although perfect price discrimination ensures efficient output decisions given product characteristics, coordination failures may prevent efficiency in the choice of product characteristics. More fundamentally, even if we have efficient product choices for a fixed number of firms, one always has excessive entry in free entry equilibrium. Our results apply to a large class of models of product differentiation including location models as well as representative consumer models of the demand for variety. These results also apply to models of common agency or lobbying with free entry and imply that one has excessive entry into the ranks of lobbyists.

Is Perfect Price Discrimination Really Efficient? An Analysis of Free Entry Equilibria

This paper analyzes the effects of a ban on smoking in public places upon firms and consumers. It presents a theoretical model and tests its predictions using unique data from before and after the introduction of smoking bans in the UK. Cigarette smoke is a public bad, and smokers and non-smokers differ in their valuation of smoke-free amenities. Consumer heterogeneity implies that the market equilibrium may result in too much uniformity, whereas social optimality requires a mix of smoking and non-smoking pubs (which can be operationalized via licensing). If the market equilibrium has almost all pubs permitting smoking (as is the case in the data) then a blanket ban reduces pub sales, profits, and consumer welfare. We collect survey data from public houses and find that the Scottish smoking ban (introduced in March 2006) reduced pub sales and harmed medium run profitability. An event study analysis of the stock market performance of pub-holding companies corroborates the negative effects of the smoking ban on firm performance.

/pdf/market-regulation-and-firm-performance-the-case-of-smoking-1v550x1gnl.pdf

Venkataraman Bhaskar

Papers

Parental sex selection and gender balance

The Demographic Transition and the Position of Women: A Marriage Market Perspective

Parental Sex Selection and Gender Balance

Is Perfect Price Discrimination Really Efficient? An Analysis of Free Entry Equilibria

Market Regulation and Firm Performance: The Case of Smoking Bans in the UK