John Cubbin

Regulatory Effectiveness: The Impact of Regulation and Regulatory Governance Arrangements on Electricity Industry Outcomes

The authors review a number of studies on the effectiveness of utility regulatory agency and governance arrangements for the electricity industry, particularly for developing countries. They discuss governance criteria and their measurement, both legal frameworks and surveys of regulatory practice. They also discuss the results from econometric studies of effectiveness for regulatory agencies in the electricity and telecommunications industries and compare these with the results from econometric studies of independent central banks and their governance. The authors conclude with a discussion of policy implications and of priorities for information collection to improve understanding of these issues.

Price, Quality and Advertising Competition: An Econometric Investigation of the United Kingdom Car Market

This paper seeks to explain the behaviour of an oligopolistic market, the United Kingdom market for cars, over the late 1950s and through the 1960s. Our primary concern is to explain market-share behaviour and thus establish the form of the demand function faced by the individual firm or by the separate divisions of such a firm. Given such information, we will be able to estimate the degree of monopoly in the industry by determining the mark-up of price over marginal costand, thereby, make some estimate of the size of the welfare loss associated with monopoly. The main obstacle to the capture of the parameters of demand functions facing specific firms is the problem of allowing for the qualitative differences among the products of different firms or divisions of firms both at a point in time and through time. Quality differences and quality changes are integrated by using a technique developed in a previous paper [3],2 The car market shows a substantial degree of product differentiation, objectively through differences in the bundles of characteristics offered in different models, and subjectively through advertising. The technique used for integrating differences in specification involves deriving implicit prices for each of the qualitative attributes, and then synthesizing the expected price for a model with a specific set of these attributes. The difference between actual and expected price is then the quality-adjusted price for the model in question. As well as explaining market-share movements for the different car manufacturers in terms of variations in price, quality and advertising, we will also, simultaneously, be concerned with the determinants of advertising appropriations. We are thus allowing for advertising to influence consumer decisions about the variety of car to be purchased, but we are also allowing for current sales to have a feedback on current managerial decisions about the level of advertising expenditure. We are assuming there is no feed-back from current sales and current advertising policy to current price and quality decisions. The prices of new cars are typically announced in October (at the Motor Show) prior to the model year and show little tendency to fluctuate during the year. Similarly, the gestation period for any substantial change in specification will typically be in excess of one year. Model changes

The Bosman Ruling and the Emergence of a Single Market in Soccer Talent

This paper discusses the effect of the ruling by the European Court of Justice in the Bosman case which delivered freedom of contract to professional soccer players. The result is examined in the context of modern investment theory where contracts between club and player are considered as options to renegotiate the contract or to sell the player to another party. The effects of the ruling are reconsidered in this light and the reaction of the soccer world to these effects are discussed.

The dynamics of company profits: The persistence of profits in the United Kingdom

A plastic drum comprising a bottom portion, a generally cylindrical side wall extending upwardly from the bottom portion, and a top portion closing the upper end of the side wall. The top portion has an elongated channel formed therein which extends completely thereacross. A support means is secured to the top portion and extends over the channel. The channel is uninterrupted with protuberances to permit a tine means of a lifting apparatus to be inserted therein below the support means so that the lifting apparatus may transport the drum. A pair of pouring spouts are provided on opposite sides of the channel outwardly of the support means.

Advertising and Post-entry Oligopoly Behaviour

This paper uses a two-stage methodology to examine the advertising response to new entry by incumbent firms. In the first stage, time-se ries regressions are employed to identify the advertising responses for a sample of forty-two companies in consumer goods markets. In the second stage, cross-section analysis is used to model the factors that might explain the post-entry increase in advertising. The results suggest a systematic response by dominant firms in static markets, and support the view that entry-deterring behavior is most likely where other entry barriers ar e already present. Copyright 1988 by Blackwell Publishing Ltd.

Directors' remuneration in the theory of the firm: Specification and testing of the null hypothesis☆

Abstract One basis for the managerial theories has been the strong correlation between firm size and executive remuneration. This may, however, simply reflect variations in managerial quality across firms. We also show that the absence of a correlation between profitability and remuneration is not evidence in favour of the managerial theories. In this paper we follow the rewards to individual U.K. managers over time, thereby controlling for quality variation. We conclude that growth is highly rewarded and involvement in mergers and takeovers attracts an extra premium. This may explain the continued popularity of mergers despite knowledge of their general unprofitability.

The Use of Real Cost as an Efficiency Measure: An Application to Merging Firms

IA recurring theme in industrial economics is firm efficiency, yet the state of the art of its measurement is not very far advanced. At one extreme are theoretically elegant methods, based on the estimation of production or cost functions, which present daunting estimation problems. At the other extreme are measures straightforward enough for practical use-such as the rate of return on capital or labour productivity-but which actually measure efficiency in only the most unusual circumstances. We became interested in this problem whilst engaged on a project which studied the economic effects of mergers, as whether firms have increased their efficiency as a result of mergers is obviously of crucial importance. Profitability alone is no guide since one would expect there to be market power effects, especially from horizontal mergers, which might alter prices; in the extreme case profits may rise simply as a result of an increase in monopoly power.1 Despite this, most of the studies of merger impact (for example, Singh [i6], Utton [I 7], Meeks [i i]) use profitability to assess the efficiency of mergers.

Can Product Differentiation Deter Entry

‘Product differentiation’ has frequently been held responsible for hindering new entry to an industry. Whether this can be a theoretical possibility depends on the exact interpretation given to the phrase. This paper shows how, from the commonly accepted meanings of the term (for example, dissimilarity in characteristics), product differentiation is actually likely to encourage entry. Only when the phrase is taken to be synonymous with advertising or some kind of demand advantage is there scope for an entry barrier effect. It is recommended that in order to avoid future confusion, more precise terminology is adopted.