Edward A. Snyder

VERTICAL INTEGRATION IN THE U.S. AUTO INDUSTRY : A NOTE ON THE INFLUENCE OF TRANSACTION SPECIFIC ASSETS

Abstract Recent refinements in the theory of the firm suggest that organization form may be sensitive not only to the degree to which assets are specific to a transaction but also to the type of capital employed. This paper reports evidence regarding the relative influence of transaction-specific investments in physical and human capital on the pattern of vertical integration using new data obtained directly from U.S. auto manufacturers. The results support the proposition that investments in specialized technical know-how have a stronger influence than those in specialized physical capital on the decision to integrate production within the firm.

Policy Analysis of Medical Malpractice Reforms: What Can We Learn from Claims Data?

Selection processes that are inherent in litigation complicate policy-oriented research of medical malpractice tort reforms. In regard to their deterrent impact, the range of potential inferences based on analyses of claim frequency is limited because plaintiffs only file a subset of potential claims. In regard to their impact on litigation costs, researchers often analyze data on claim disposition, but it is difficult to determine whether effects attributed to tort reforms reflect changes in litigant behavior or their influences on the selection of claims. In this article, we evaluate these problems and report results of our study of the effects of medical malpractice reforms on claim disposition.

The Effect of Higher Criminal Penalties on Antitrust Enforcement

IN 1974 Congress elevated penalties for criminal antitrust offenses from the misdemeanor to the felony level, an action that significantly increased the maximum penalties available to the courts.1 This legislation is one example of frequent congressional interventions that either regulate sentencing practices or are intended to raise penalties for particular crimes.2 This article will analyze the potential effects from such legislation and assess empirically the effect of the felony penalties on antitrust enforcement. The empirical work uses an original data set and a technique that has only recently been applied to analyses of litigation. In assessing the deterrent effects of the felony penalties, the following questions are relevant. First, how do the courts react to statutory changes in penalties? In this case, the courts followed congressional intent by sentencing those convicted to substantially longer jail terms and higher

Resolution of Insolvent Thrifts: Fundamental Issues

Once insolvent thrifts are under its control, FSLIC must provide financial assistance to induce others to assume deposit liabilities. But how should FSLIC use its primary resolution alternatives -- assisted acquisition and liquidation -- to minimize the cost of meeting its obligations to depositors? Should FSLIC liquidate all insolvent thrifts? If only some, which ones? In this section we discuss principles that should guide the resolution process and thereby establish a basis for our substantive analysis in Chapters 4 through 6 that follow.

Enforcement of Anticollusion Laws against Domestic and Foreign Firms

Antitrust authorities must decide whether and how to consider the national identities of firms. Authorities may follow a neutral enforcement approach or focus on either foreign or domestic firms. We investigate these issues in the context of cartel enforcement against EU, US, and rest-of-the-world (ROW) firms by the European Union and the United States—the two jurisdictions with the longest and most robust enforcement histories. Our results suggest a mix of behaviors. The European Union is more likely to fine domestic and ROW firms than US firms, and the United States is no more likely to fine EU firms than domestic firms but disproportionately targets ROW firms. With respect to the size of fines, EU enforcement outcomes show no significant differences among categories of firms. The United States, however, levies significantly higher fines on foreign firms than domestic firms, whether from the European Union or the rest of the world.

Five Easy Questions

The purpose of this chapter is to provoke useful thinking about the future of management education, or, more precisely, about the high-end segment of management education. Given that one cannot suggest where management education should focus without considering the nature of the leadership challenges for the balance of this challenging century, my intended audience includes both fellow deans and faculty members at the top business schools as well as aspiring leaders in all sectors.

Empirical Evidence on FSLIC’s Cost of Solution

There has been considerable public controversy and speculation surrounding several aspects of FSLIC’s 1988 assisted acquisitions. In particular, people have questioned whether the “December deals” and “Texas deals” were as cost-effective as other deals, and whether deals involving large tax considerations added to the total cost of resolving cases through acquisition. Precisely because of all the controversy, it is important to begin the process of confronting the speculation with empirical evidence.

The Timeliness of Regulatory Action

In this Chapter we examine the sources of liability growth and analyze FSLIC’s efforts to control this growth. Much of this Chapter provides institutional detail about the process by which an insolvent institution is identified and brought under FSLIC control. It is important to point out that inasmuch as FSLIC’s exposure to deposit insurance claims reflects poor investment decisions made by thrifts in the past, the net worth deficit represents a problem that cannot be undone by FSLIC or the FHLBB. Hence, attention should be focused on the time required for FSLIC to assume control of insolvent thrifts and the rate of growth of FSLIC liabilities once an insolvent thrift is under FSLIC control.

FSLIC’s Acquisition Process

In the remainder of this report we describe and analyze FSLIC’s resolution methodology and the application of this methodology during the 1988 calendar year. In this Chapter we analyze the competitive bidding and negotiation process used by FSLIC. The methods used to evaluate the bids and to compare them with the option to liquidate are evaluated in Chapter 5. Empirical analysis of the results of the 1988 resolution process are then presented in Chapter 6.

Analysis of FSLIC’s Methodology for Evaluating Bids

As indicated in Chapter 3, the ideal approach for making the liquidation versus acquisition decision would be for FSLIC to measure directly thrift franchise value. If a positive franchise value exists, FSLIC would attempt to capture that value in sales to acquirers. If no franchise value exists, the thrift would be liquidated provided that the problem assets can be managed by a receivership without too great a loss in efficiency.