Donald Hay

The Post‐1990 Brazilian Trade Liberalisation and the Performance of Large Manufacturing Firms: Productivity, Market Share and Profits

This paper analyses the effects of the 1990 Brazilian trade liberalization on the total factor productivity, market share and profits of a sample of 349 large manufacturing firms. A panel data production function analysis for the period 1986/94 indicates very large total factor productivity gains in the period to 1994, which were accompanied by large falls in market shares and profits. The explanation advanced is that the shock of trade liberalization to profits was so great that firms were stimulated to improve their efficiency dramatically.

Industrial economics : theory and evidence

This textbook for advanced students gives a comprehensive review of recent theoretical and empirical works, emphasizing the need to relate the two in a subject where they have often been separated.

THE EFFICIENCY OF FIRMS: WHAT DIFFERENCE DOES COMPETITION MAKE?*

In Cournot oligopoly the efficiency of a firm relative to others determines its market share: this relationship gives an incentive to improve efficiency. The incentives are greater in markets where firm behaviour is more competitive. Components of firm efficiency are identified by frontier production function techniques in 19 UK manufacturing sectors: technical change, average efficiency of each firm relative to the frontier, and the efficiency of each firm relative to its own ‘best practice’ in each period. Short run declines in market shares and profits induce the firm to improve efficiency relative to its ‘best practice’. Long run differences in efficiency are correlated with differences in gross investment.

Firms as Portfolios: A Mean-Variance Analysis of Unquoted UK Companies

This paper adopts a mean-variance portfolio framework to model the balance sheet behavior of unquoted companies with respect to choice items such as fixed investment, investment in stocks, trade credit, and borrowing. Econometric results for a sample of thirty-nine U.K. firms are consistent with many of the restrictions implied by portfolio theory, in particular that these balance sheet items are jointly determined. Copyright 1989 by Blackwell Publishing Ltd.

The Investment Behaviour of Firms in an Oligopolistic Setting

Industrial organization theory has identified strategic investment in capacity as an important element in competition in oligopolistic markets. In this paper, the authors specify a model of oligopolistic investment behavior and test it with panel data for 114 firms in fifteen narrowly defined U.K. manufacturing industries in the 1970s and 1980s. The industries are distinguished according to their market characteristics as fragmented, dominant firm, and dominant group sectors. The results indicate behavior that is noncooperative in fragmented sectors, cooperative in dominant group sectors, and competitive in dominant firm sectors. Copyright 1998 by Blackwell Publishing Ltd

Cost Behaviour of Chinese State-owned Manufacturing Enterprises in the 1980s

This paper aims to model the cost behaviour of Chinese state-owned enterprises in the 1980s. Given production autonomy and profit-related bonus incentives, state firms are expected to increase profits and therefore bonuses by changing their cost behaviours more rationally. However, since institutional constraints remain and distort the rational demand of the firm for input factors, the changes cannot go as far as expected by the standard neoclassical cost minimisation theory. Based on this, we derived a total cost function for Chinese state firms restricted by the government control over their total wage bills. We then test it using a panel data of 386 state manufacturing enterprises in the period 1983-87. It is found that the model predicted well. Despite the constraints, the reform did lead the firms to respond to both changes in factor prices in the directions expected by cost minimising behaviour and to bonus incentives to produce more efficiently.

Demands for short-term assets and liabilities by UK quoted companies

The demands for short-term assets and liabilities of UK quoted firms are explored within a theoretical framework borrowed from portfolio theory, and tested with data from two samples of firms, one of large fast-growing firms and the other of smaller slow-growing firms. The results suggest that the model is able to capture the interaction between firm decisions on short-term borrowing, trade debt and trade credit, and on the desired level of cash assets. But there are significant differences in the parameters of the equation system between the two samples.

A financial portfolio approach to inventory behaviour: Japan and the UK

Abstract The paper analyses the determinants of the inventory to assets ratio in panel data sets of Japanese and UK firms in the period 1960–1985. The analytical framework sets inventory decisions in the context of decisions by the firm about other assets and liabilities, in contrast to traditional models of inventories. Investment in inventories in Japan is found to be particularly related to sector specific inflation rates and expected sales, negatively to expected profits, and not much affected by interest rates. By contrast, UK inventories are generally positively related to profit rates, and respond to short term interest rates. Once other variables are taken into account, the coefficient on a time trend is positive for Japan (negative for Britain), which casts some doubt on the widely held view of Japanese innovation in inventory holding.

The Reform of Uk Competition Policy

This article assesses the recent government review of U.K. competition policy and its conclusions. The authors find that, while proposals for change in restrictive practices policy involve a fundamental change and a major step towards bringing U.K. law more closely into line with EEC law, the proposals for mergers policy are not as far-reaching and represent a missed opportunity for reform.

Self and Neighbours

The paper notes the findings of a panel survey in the USA to motivate a framework to model altruistic behaviour by members of faith communities. We posit an internal tension within agents to be oriented to self or to neighbours. We model this by a mixed motive valuation function which values both classic utility (based on own consumption), and generosity to neighbours. In the short run, the value assigned to generosity by an agent is fixed; in the long run, it is determined by the agent’s understanding and practice of ‘love for neighbour’ (as discussed in McCloskey, 2006), which, according to the Christian world view, is influenced by the agent’s spiritual state.