Julien Hanoteau

The Shrinking Hand: Why Information Technology Leads to Smaller Firms

We explain the firm downsizing trend of the recent decades by the new abundance of information -- the ICT revolution. Production processes differ in their information requirements: while decentralized production by means of market exchanges is information intensive, less information per unit of output is needed in the hierarchically integrated production of firms, and the information/output ratio is decreasing firm size. We formulate a quantity of information theory of the firm embodying these differences and derive a Coase--Rybczinski effect for the aggregate economy, which predicts a decreasing employment share of large firms and an increasing share of small ones when the aggregate quantity of information increases Panel data regressions and other evidence provide support for this hypothesis.

The sustained incremental multi-actor multi-action building of South Korean soft power in Indonesia

ABSTRACT Since the end of the East–West divide in the 1990s, the world has slowly lost its US-based unipolarity to globalisation, and a shift towards East Asia. This phenomenon has given more space to middle powers and furthered the embeddedness of the political, economic, and cultural spheres into the dynamics of social structures. It is highly visible when observed from the digital communication standpoint, which has become pervasive. In this context, the study of international power has moved towards the concept of soft power, which remains a fuzzy concept concerning ‘who’ and ‘what’. We define power as a continuum, in which various types of public and private actors carry out different types of coercive to cooptive actions in various but embedded spheres. We propose an empirically tractable conceptual framework that we use as a tool to analyse soft power within a hard-to-soft power spectrum, in which the articulation, dynamics and incremental nature of soft power become observable. We illustrate our point with the case study of South Korean power in Indonesia in the twenty-first century and draw conceptual as well as practical conclusions.

Lobbying for carbon permits in Europe

Using cross-sector and cross-country data, this paper evidences that rent seeking influenced the allocation of CO 2 emission permits in the two first phases of the European emissions trading scheme. Industry lobbies effectively used the ?job loss? and ?competitiveness? arguments, as unemployment proxy variables significantly impacted the allocation in both phases, and carbon intensity influenced it in the second phase. The countries that adopted a partial auction scheme also gave relatively more permits and in particular to the politically more powerful sectors. This suggests a compensation mechanism and supports the assumption of a political tradeoff between the quantity of permits issued and the decision between free grant and auction. It also confirms that the initial allocation is not neutral in the presence of special interest lobbying. JEL Classification: D72, Q58, C10.

Why Information Technology Leads to Smaller Firms

We show why the new information abundance - the IT revolution - shifts and distorts the size distribution of firms, explaining the general and continuing downsizing trend of the recent decades, and reversing the previous 1880/1960-70 secular increase of big business. We formulate an information theory of the firm and derive a Coase-Rybczinski effect, which predicts a decreasing employment share of large firms and an increasing share of small ones. Panel data regressions and other evidence provide support for this hypothesis.