Showing papers on "Managerial economics published in 2006"

The Turn in Economics: Neoclassical Dominance to Mainstream Pluralism?

Abstract: This paper investigates whether since the 1980s neoclassical economics has been in the process of being supplanted as the dominant research programme in economics by a collection of competing research approaches which share relatively little in common with each other or with neoclassical economics. A shortlist of the new approaches in recent economics includes game theory, experimental economics, behavioral economics, evolutionary economics, neuroeconomics, and non-linear complexity theory. Two hypotheses are advanced – one regarding the relation between economics instruction and economics research and one regarding the nature of the economics research frontier – to describe social-institutional practices that contribute to the replication of economics as a field. Two further hypotheses are advanced – one regarding the boundaries of the field and one regarding how the field appraises itself – to create a historical–methodological framework for evaluating the question of change in economics and change in recent economics in particular. Finally, the paper distinguishes three leading explanations – the ‘breakdown’ view, the ‘takeover’ view, and the ‘maturity’ view – of why neoclassical economics no longer dominates a mainstream economics.

Non-welfarist optimal taxation and behavioral public economics

Abstract: Research in behavioral economics has uncovered the widespread phenomenon of people making decisions against their own good intentions. In these situations, the government might want to intervene, indeed individuals might want the government to intervene, to induce behavior that is closer to what individuals wish they were doing. The analysis of such corrective interventions, through taxes and subsidies, might be called ”behavioral public economics.” However, such analysis, where the government has an objective function that is different from that of individuals, is not new in public economics. In these cases the government is said to be ”non-welfarist” in its objectives, and there is a long tradition of nonwelfarist welfare economics, especially the analysis of optimal taxation and subsidy policy where the outcomes of individual behavior are evaluated using a preference function different from the one that generated the outcomes. The object of this paper is to first of all present a unified view of the non-welfarist optimal taxation literature and, secondly, to present behavioral public economics as a natural special case of this general framework.

Green Economics: setting the scene. Aims, context, and philosophical underpinning of the distinctive new solutions offered by Green Economics

Abstract: Green Economics positions economics within a very long-term, earth-wide, holistic context of reality as a part of nature. It also incorporates and celebrates 'difference', diversity, equity and inclusiveness within its concepts of society and community. Its philosophy is to manage economics for nature as usual, rather than to manage the environment for business as usual. The paper introduces the new Green Economics discipline and reviews its shape and philosophical underpinnings. By combining economics with knowledge from the natural sciences, we argue that Green Economics can incorporate a much wider, more practical, multidisciplinary range of knowledge than other schools of economics. The paper suggests how Green Economics can offer unique insights into four of the key areas ('eco', intellectual, political and moral) of today's significant and mounting problems and highlights how its novel insights provide new solutions. The development of this new branch of Economics is justified in this text by reviewing the main contradictions, deficiencies, assumptions, conventions, and inherent normative concepts to be found in dominant neo-classical economic thinking, which have accumulated over the past two centuries.

Economics and Information Systems

Abstract: Contains chapters that focus on the individual interrelated subjects regarding the economics of information systems: the adoption and diffusion of information technologies; the pricing of data communications; the means and tactics firms us to compete with each other; and the manner in which firms interact with and distribute goods to customers.

Democracy and sustainable development--what is the alternative to cost-benefit analysis?

Abstract: Cost–benefit analysis (CBA) is part of neoclassical economics, a specific paradigm, or theoretical perspective. In searching for alternatives to CBA, competing theoretical frameworks in economics appear to be a natural starting point. Positional analysis (PA) as an alternative to CBA is built on institutional theory and a different set of assumptions about human beings, organizations, markets, etc. Sustainable development (SD) is a multidimensional concept that includes social and ecological dimensions in addition to monetary aspects. If the political commitment to SD in the European Union and elsewhere is taken seriously, then approaches to decision making should be chosen that 1st open the door for multidimensional analysis rather than close it. Sustainable development suggests a direction for development in a broad sense but is still open to different interpretations. Each such interpretation is political in kind, and a 2nd criterion for judging different approaches is whether they are ideologically open rather than closed. Although methods for decision making have traditionally been connected with mathematical objective functions and optimization, the purpose of PA is to illuminate a decision situation in a many-sided way with respect to possibly relevant ideological orientations, alternatives, and consequences. Decisions are understood in terms of matching the ideological orientation of each decision maker with the expected effects profile of each alternative considered. Appropriateness and pattern recognition are other concepts in understanding this process.

Evolutionary Economics, Classical Development Economics, and the History of Economic Policy: A Plea for Theorizing by Inclusion

Abstract: The author argues that in order to create a qualitative understanding of the factors polarizing the world in growing wealth and growing poverty there is a need to create economics by inclusion, a system where all relevant factors, some of which have been part of the economic discourse for centuries, but also elements (like the different effects of process and product innovations) that are part of evolutionary economics itself, are considered simultaneously. According to the author, this historical/institutional approach to economics would benefit especially the Third World. Moreover, the economics by inclusion should also open the way for policies of inclusion, a system that will put the accent on the wellbeing of the majority and not on the growth of the export sector.

“Behavioral experiments” in economics

Abstract: Behavioral economics has grown significantly in importance and prevalence within the economics profession over the last couple of decades. Most economics departments now include researchers conducting behavioral research, and most economics journals regularly publish behavioral work. Behavioral economics is generally defined as using evidence and constructs from neighboring social sciences, especially about limits on computation, willpower, and self-interest, to inform economic analysis (e.g., Camerer and Loewenstein, 2003). While many of these constructs come from psychology, other social sciences have much to contribute as well (see Weber and Dawes, 2005). For instance, anthropological research has provided important insights into the understanding of how social institutions and interactions shape strategic behavior (see Henrich et al., 2001). Behavioral economics can often be defined by goals and methods. Behavioral research usually seeks to develop theory that is consistent with realistic aspects of human judgment and decision making, such as bounded rationality and non-egoistic motives. As a result, most behavioral research is based on the careful comparison between theoretical predictions and the actual behavior of individuals and the outcomes observed in economic environments. Put differently, behavioral economics seeks to inform economics and economic theory by how people and economic institutions actually behave. Importantly, most behavioral economists have the goal, not of developing an alternative to economic theory and methods, but instead to incorporate new assumptions and methods into mainstream economics research. Thus, the goal of behavioral economists is not to develop a “behavioral economic theory” but instead to improve economic theory so that it is also “behavioral.” Before proceeding to a discussion of the important methodological relationship between behavioral and experimental economics, it is worth noting one important likely consequence of the growth of behavioral research within the economic profession. Historically, behavioral economics has often been defined in practice as adding variables to a rational-choice model or weakening rationality (including self-interest) in a systematicway. As this approach becomes a more widespread practice, using a single term “behavioral economics” to describe all the contributions is likely to become unwieldy and the term will likely evaporate (replaced by specific names of models as they become familiar).

The institutionalization of Open Source

Abstract: Using concepts of neoinstitutional economics, such as transaction cost economics, institutional economics, property rights theory, and information economics, the development of the Open Source movement is investigated. Following the evolution of institutions in Open Source, it is discussed what the comparative institutional advantages of this model are. The conclusion is that it is the institutional framework of Open Source, not merely the low cost of Open Source software that makes it an attractive alternative mode of organizing the production and distribution of software and software-related services. Alternative organizations will be formed and existing organizations will be transformed to take advantage of its opportunities.

Natural Science Constraints in Environmental and Resource Economics. Method and Problem

Abstract: Most, if not all, environmental problems of our time have their origin in human economic activity. In order to better understand how environmental problems arise from economic activity and how they may be solved in a sustainable manner, one needs to combine scientific expertise from the natural sciences and from economics. For, it is the domain of the natural sciences to analyze nature', while economics studies the economy'. In this study, I contribute to this interdisciplinary task in a threefold manner: (i) In Part I, I employ concepts and methods from thermodynamics in order to study how this natural science puts constraints on the transformation of energy and matter in the economic process of production. (ii) In Part II, I analyze the problem of biodiversity loss and conservation by combining concepts and methods from ecology and economics to study coupled ecological-economic systems. (iii) An underlying interest throughout this study is the methodological question of how to integrate concepts and methods from the natural sciences, such as thermodynamics or ecology, and the social sciences, such as economics. The approaches in Parts I and II are complementary in that they follow different methodological approaches to interdisciplinary integration of natural science constraints into environmental and resource economics - method-orientation and problem-orientation, respectively.

Behavioral labor economics

Abstract: Behavioral economics has in recent decades emerged as a prominent set of methodological developments that have attracted considerable attention both within and outside the economics profession. The time is therefore auspicious to assess behavioral contributions to particular subfields of economics such as labor economics. With empirical validity among its chief objectives, one might guess that behavioral economics would have made its clearest mark in data-driven subfields such as labor economics. Motivated in part by the question of why labor economics has been a relatively slow adopter of behavioral theory, this essay surveys a wide range of behavioral studies that address core labor issues. Part of the explanation is that labor economists working in the neoclassical tradition have been relatively frank in revealing shortcomings of the neoclassical theory and aggressive in empirically testing its predictions. Therefore, new work in behavioral labor economics may represent less of a methodological break than in other subfields of economics.

Exploring a New ExpAce The complementarities between experimental economics and agent-based computational economics

Abstract: What is the relationship, if any, between Experimental Economics and Agentbased Computational Economics? Experimental Economics (EXP) investigates individual behaviour (and the emergence of aggregate regularities) by means of human subject experiments. Agent-based Computational Economics (ACE), on the other hand, studies the relationships between the micro and the macro level with the aid of artificial experiments. Note that the way ACE makes use of experiments to formulate theories is indeed similar to the way EXP does. The question we want to address is whether they can complement and integrate with each other. What can Agent-based computational Economics give to, and take from, Experimental Economics? Can they help and sustain each other, and ultimately gain space out of their restricted respective niches of practitioners? We believe that the answer to all these questions is yes: there can be and there should be profitable “contaminations” in both directions, of which we provide a

An overview of green economics

Abstract: This paper reviews the foundational axioms, principles, aims and instruments of the system of Green Economics. It ties economics to its ecological foundations, delineates a simple structure for the economy, investigates the relationship between resources, work, wealth and money. Equity is discussed in all its relationships, and capitalism and divergence between the fortunes of rich and poor are considered. Green economics is a new discipline, and this is therefore an important moment in which to try to find an orientation and to try to produce a sketch map of the field. This paper is an attempt to provide a provisional plan. Its aim is to place the various elements of green economics into relationship with each other rather than to provide a detailed exposition or argument for each point.

Knowledge, beliefs and economics

Abstract: Contents: 1. Introduction Richard Arena and Agnes Festre PART I: KNOWLEGDE AND BELIEFS IN THE HISTORY OF ECONOMIC ANALYSIS: MARSHALLIANS, AUSTRIANS AND WALRASIANS 2. Expectations, Uncertainty and Beliefs in Marshallian and Post-Marshallian Analyses of Economic Systems Brian J. Loasby 3. Knowledge and Beliefs in Economics: The Case of the Austrian Tradition Richard Arena and Agnes Festre 4. General Equilibrium, Co-ordination and Multiplicity on Spot Markets Roger Guesnerie PART II: KNOWLEDGE AND BELIEFS IN GAME THEORY 5. Justifications of Game Theoretic Equilibrium Notions Bernard Walliser 6. Game Theory and Players' Beliefs on the Play Christian Schmidt PART III: BELIEFS AND DECISION THEORY 7. Beliefs and Dynamic Consistency Jean-Marc Tallon and Jean-Christophe Vergnaud 8. Utility or Rationality? Restricted or General Rationality? Raymond Boudon PART IV: KNOWLEDGE, BELIEFS AND COGNITIVE ECONOMICS 9. The Cognitive Turning Point in Economics: Social Beliefs and Conventions Andre Orlean 10. A Cognitive Approach to Individual Learning: Some Experimental Results Marco Novarese and Salvatore Rizzello PART V: AGENTS, COMMUNITIES AND COLLECTIVE BELIEFS 11. Consumer Communities, Self-organization and Beliefs Stephane Ngo-Mai and Alain Raybaut 12. Informal Communication, Collective Beliefs and Corporate Culture: A Conception of the Organization as a 'Community of Communities' Patrick Cohendet and Morad Diani Index

Behavioral Test Economics

Abstract: This paper raises the issue of why test engineers often do not act in ways which test economics says are optimal. The new field of behavioral economics explains why people often do not act in their economic self interest, and the authors propose that some of the same principles, applied to testing, can explain some of the behavior of test engineers. The authors use several examples to illustrate these principles, and for each describe the underlying economic and behavioral economic principles behind them, and give recommendations for decision makers

The Economics of Competition: The Race to Monopoly

Abstract: A comprehensive examination of the ways competition and innovations level the playing field in the free marketThe Economics of Competition uses the South African pharmaceutical industry as a case study to cogently challenge accepted economic and regulatory views on competition and monopoly, then re-establishes and emphasizes the importance of foundational economic principles. The book comprehensively explores the concept that monopoly is self-limiting within unrestricted competition, as well as the various market features of competition, innovation, and market power. This detailed examination broadens understanding of the economics of competition for both scholars and practitioners.Competition is seen as a continuous process in a free market. The Economics of Competition thoughtfully explores the competitive process in its two mechanisms, the transfer of market share from one rival to another, and innovation of a new product, new method of production, new market opening, or new source of supply of raw materials. The dynamic nature of the marketplace is thoroughly examined from the author's inside view of the South African pharmaceutical industry. This provides a rare opportunity to closely examine an industry considered to be a monopoly while actively applying economic theories of competition and freedom of choice. The effects of public policy, legislation, and pricing regulations are discussed in detail. The book has several tables and figures to enhance clarity and is extensively referenced.The Economics of Competition discusses:* monopoly and rivalry in the free market* theories of perfect competition* innovation as a controlling variable* pricing and price differentiation* barriers to competition—including historical and contemporary legislative barriers * horizontal mergers and acquisitions as a key aspect of market power* and more!The Economics of Competition is insightful, thought-provoking reading for policymakers as well as anyone practising antitrust law, microeconomics, industrial economics, managerial economics, marketing strategy, theoretical public health, and students and educators of marketing and economics.

Economics by Example

Abstract: Lively, surprising, yet filled with solid economic content, "Economics by Example" is for students who want to understand why they should study economics while in the process of learning it. This concise paperback introduces economic principles in the context of real-life applications, with much to say about how the economic way of thinking can improve students' decisions. "Economics by Example" was created to support traditional texts but it can also be used on its own, in courses requiring minimal mathematics or graphical analysis."

The Cognitive Turning Point in Economics: Social Beliefs and Conventions

Abstract: This book surveys how economists engage with knowledge and beliefs in various fields of economic analysis, such as general equilibrium theory, decision theory, game theory, experimental economics, evolutionary theory of the firm, financial markets and the history of economic thought.

The economic logic of corporate social responsibility: implications for strategy, policy and education

Abstract: This paper explores the phenomenon of firms in imperfectly competitive industries voluntarily choosing to internalise social and environmental costs that they are not legally obliged to bear. It is possible to construct variant models of 'differentiated oligopoly' in which expenditures of resources on the creation of seemingly 'external' benefits appear economically logical to decision-makers in firms for whom maximising shareholder value is still a primary, if not dominant objective. The key to understanding this phenomenon, appears to be a more sophisticated view of consumer demand for differentiated products and a more dynamic, multiperiod and capital theory-integrated view of costs. Certain ideas of Lancaster on consumer demand and of Alchian on costs, that have not enjoyed the prominence they arguably deserve, are very helpful in this regard. The drive to innovation (Schumpeterian 'creative destruction') the ubiquity of competition over 'quality' or 'features' rather than price, the ever-present need of oligopolists to deter new entrants and dynamically diminishing returns to investment in conventional advertising, are all relevant factors. Theoretical aspects of the phenomenon are explored and reference is made to selected recent case studies. Implications of the analysis for efforts to achieve more realism and effectiveness in teaching managerial economics and management accounting, and for better microdesign of tax-shifting and other policies suggested by ecological economists, are drawn out. By consciously harnessing the forces, which motivate corporate Social Responsibility (CSR) as a competitive strategy, governments may be able to economise on scarce political capital and obtain greater leverage out of any given package of ecologically focused, tax-shifting initiatives.

Studies in business and economics

Abstract: A pertinent analysis of the retail industry's future must include a substantial analysis on emerging countries. These markets will play a more important role in future global economic dynamics, but nevertheless, most concerns focus still on the side that brings opportunities for major retailers. In this context, this article proposes a presentation of the Romanian discount market, with emphasis on positioning strategies of discount supermarkets and hypermarkets.

Statistics for Business and Economics

Abstract: (2006). Statistics for Business and Economics. The American Statistician: Vol. 60, No. 4, pp. 342-343.

Price Rigidity and Flexibility: Recent Theoretical Developments

Abstract: The price system - the adjustment of prices to changes in market conditions - is the primary mechanism by which markets function and by which the three most basic questions get answered; what to produce, how much to produce, and for whom to produce. The behavior of price and price system, therefore, have fundamental implications for many key issues in microeconomics and industrial organization, as well as in macroeconomics and monetary economics. In microeconomics, managerial economics, and industrial organization, economists focus on the price system efficiency. In macroeconomics and monetary economics, economists focus on the extent to which nominal prices fail to adjust to changes in market conditions. Nominal price rigidities play a particularly important role in modern monetary economics and in the conduct of monetary policy because of their ability to explain short-run monetary non-neutrality. The behavior of prices, and in particular the extent of their rigidity and flexibility, therefore, is of central importance in economics.

On Economics as a World View

Abstract: Stigler (1965) argued that economists can provide policy-makers with sound policy recommendations, so that the efficiency of resource utilization can be improved. But a more fundamental way to improve the efficiency of resource utilization is to enable the general public to think like an economist . To achieve this aim, however, the way of thinking as implied by economics must be identified first; this paper discusses the particular perspective of economics. The idea of a spectrum is used to discuss various ways of defining economics. Then, it is argued that the concept of cost and a benchmark constitute a basic perspective of economics, or the economic world view. Finally, practical steps to relate this world view to the general public are suggested. JEL classification: All, A20, B20, B41.

Fundamentals of Economics for Business

Abstract: Business and Economics Demand and Supply: The Basics The Market Mechanism and the Impact of Regulation and Taxation The Costs of Production Two Benchmarks for Business Strategy: Perfect Competition and Monopoly Alternative Market Structures, Business Strategy and Public Policy The Global Economy I: The Debate over Free Trade Economic Indicators and the Basic Data of the Macroeconomy The Simple "Keynesian" Model and an Introduction to Fiscal Policy Money and Inflation Is There a Trade-Off between Inflation and Economic Growth? The Global Economy II: The Balance of Payments and Exchange Rates The Global Economy III: Some Topics in International Finance Economic Growth and Competitiveness: A Macro-Micro Synthesis