Paul Schure

A Recursive Thick Frontier Approach to Estimating Production Efficiency

We introduce a new panel data estimation technique for cost and production functions: the Recursive Thick Frontier Approach (RTFA). RTFA has two advantages over existing thick frontier methods. First, technical inefficiency is allowed to be dependent on the explanatory variables of the frontier model. Secondly, no distributional assumptions are imposed on the inefficiency component of the error term. We show by means of simulation experiments that RTFA can outperform the popular stochastic frontier approach (SFA) and the “within” OLS estimator for realistic parameterisations of the productivity model.

European Financial Market Integration

Market integration is the process towards the formation of a single market. In a perfectly integrated market, geography is a non-issue for buyers of goods and services. However, markets are usually not perfectly integrated in reality — geography typically does play a role. There are barriers to trade, either because of the nature of the markets or because of institutional restrictions. For example, the nature of the market may be that buyers do not want to travel too far to buy the goods (e.g. their Saturday morning cappuccino or their groceries). Examples of institutional restrictions are tariffs, waiting time at a border, product labels in a foreign language and differences in product standards. Continued market integration has been a central mission of the European Union (EU) since its inception. The Treaty of Rome (1957) envisaged the establishment of a common market founded on the principle of free movement of goods, services, people and capital.

Ownership Dynamics within Founder Teams: The Role of External Financing

This paper examines how founders within start-up teams dynamically re-adjust their relative ownership stakes. It leverages a unique dataset from British Columbia, Canada, which contains detailed information on founder ownership over time. Two trade-offs between efficiency and fairness are identified, one at the time of founding, the other as the venture develops. Teams with a preference for fairness at the start, as witnessed by an equal division of founder shares, also exhibit a dynamic preference for fairness, as witnessed by a reluctance to change ownership over time. Relative founder stakes are more likely to change when a company raises investments. Larger rounds, and lower valuations are associated with bigger changes in relative founder stakes.