National Bureau of Economic Research

About: National Bureau of Economic Research is a nonprofit organization based out in Cambridge, Massachusetts, United States. It is known for research contribution in the topics: Monetary policy & Population. The organization has 2626 authors who have published 34177 publications receiving 2818124 citations. The organization is also known as: NBER & The National Bureau of Economic Research.

Search, Obfuscation, and Price Elasticities on the Internet

Abstract: We examine the competition between a group of Internet retailers that operate in an environment where a price search engine plays a dominant role. We show that for some products in this environment, the easy price search makes demand tremendously price-sensitive. Retailers, though, engage in obfuscation---practices that frustrate consumer search or make it less damaging to firms---resulting in much less price sensitivity on other products. We discuss several models of obfuscation and examine its effects on demand and markups empirically. Observed markups are adequate to allow efficient online retailers to survive.

Stock markets, banks, and economic growth

Abstract: Using data on 49 countries from 1976 to 1993, the authors investigate whether measures of stock market liquidity, size, volatility, and integration in world capital markets predict future rates of economic growth, capital accumulation, productivity improvements, and private savings. They find that stock market liquidity-as measured by stock trading relative to the size of the market and economy - is positively and significantly correlated with current and future rates of economic growth, capital accumulation, productivity growth, even after controlling for economic and political factors. Stock market size, volatility, and integration are not robustly linked with growth. Nor are financial indicators closely associated with private savings rates. Significantly, banking development -as measured by bank loans to private enterprises divided by GDP -when combined with stock market liquidity predicts future rates of growth, capital accumulation, and productivity growth when entered together in regressions. The authors determine that these results are consistent with views that (1)financial markets and institutions provide important services for long-run growth, and (2)stock markets and banks provide different financial services.

Money Chasing Deals?: The Impact of Fund Inflows on Private Equity Valuations

Abstract: This paper examines the positive impact of the inflows of capital into venture funds on the valuations of their investments in firms and two potential explanations for the relationship. Growth in venture capital commitments is shown to increase the valuation of new investments. This effect is robust to (i) the addition of controls for firm characteristics, public market valuations, and various alternative hypotheses, (ii) an examination of first differences, and (iii) the use of inflows into leveraged buyout funds as an instrumental variable. Interaction terms suggest that the impact of venture capital inflows on prices is greatest in states with the most venture capital activity. Changes in valuations do not appear related to the ultimate success of these firms. The findings are consistent with suggestions that competition for a limited number of good investments may be responsible for rising prices. See also my related papers "Venture Capital and Private Equity: A Course Overview", "What Drives Venture Capital Fundraising?", and "Conflict of Interest and Reputation in the Issuance of Public Securities: Evidence from Venture Capital".

Executive Compensation, Strategic Competition, and Relative Performance Evaluation: Theory and Evidence

Abstract: We argue that strategic interactions between firms in an oligopoly can explain the puzzling lack of high-powered incentives in executive compensation contracts written by shareholders whose objective is to maximize the value of their shares. We derive the optimal compensation contracts for managers and demonstrate that the use of high-powered incentives will be limited by the need to soften product market competition. In particular, when managers can be compensated based on their own and their rivals' performance, we show that there will be an inverse relationship between the magnitude of high-powered incentives and the degree of competition in the industry. More competitive industries are characterized by weaker pay-performance incentives. Empirically, we find strong evidence of this inverse relationship in the compensation of executives in the United States. Our econometric results are not consistent with alternative theories of the effect of competition on executive compensation. We conclude that strategic considerations can preclude the use of high-powered incentives, in contrast to the predictions of the standard principal-agent model.

Innovation and productivity in SMEs: empirical evidence for Italy

Abstract: Innovation in SMEs exhibits some peculiar features that most traditional indicators of innovation activity do not capture Therefore, in this paper, we develop a structural model of innovation that incorporates information on innovation success from firm surveys along with the usual R&D expenditures and productivity measures We then apply the model to data on Italian SMEs from the “Survey on Manufacturing Firms” conducted by Mediocredito-Capitalia covering the period 1995–2003 The model is estimated in steps, following the logic of firms’ decisions and outcomes We find that international competition fosters R&D intensity, especially for high-tech firms Firm size and R&D intensity, along with investment in equipment, enhances the likelihood of having both process and product innovation Both these kinds of innovation have a positive impact on firm’s productivity, especially process innovation Among SMEs, larger and older firms seem to be less productive