Home About us Contact | |||
Entry Costs (entry + cost)
Selected AbstractsOptimal Life-Cycle Asset Allocation: Understanding the Empirical EvidenceTHE JOURNAL OF FINANCE, Issue 2 2005FRANCISCO GOMES ABSTRACT We show that a life-cycle model with realistically calibrated uninsurable labor income risk and moderate risk aversion can simultaneously match stock market participation rates and asset allocation decisions conditional on participation. The key ingredients of the model are Epstein,Zin preferences, a fixed stock market entry cost, and moderate heterogeneity in risk aversion. Households with low risk aversion smooth earnings shocks with a small buffer stock of assets, and consequently most of them (optimally) never invest in equities. Therefore, the marginal stockholders are (endogenously) more risk averse, and as a result they do not invest their portfolios fully in stocks. [source] Batch process and transfer decisions in foreign market: a real options modelAPPLIED STOCHASTIC MODELS IN BUSINESS AND INDUSTRY, Issue 2 2003Chin-Tsai Lin Abstract This investigation extends the constant elasticity of substitution (CES) batch process production model of Lin et al. (J. Management syst. 2002; 9: 173) for an uncertain exchange rate by considering an export-oriented manufacturer who can decide to switch freely between domestic and foreign locations. The export-oriented manufacturer is risk averse and has rational expectations. As the entry cost declines, the export-oriented manufacturer's entry trigger for the CES production function increases for transferring from a domestic and to a foreign location. Additionally, the manufacturer's exit trigger for CES production function increases for transferring from a foreign and to a domestic location. Moreover, the exit cost resembles the entry cost. Copyright © 2002 John Wiley & Sons, Ltd. [source] Social Interactions and Entrepreneurial ActivityJOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Issue 3 2009Mariassunta Giannetti We show that individuals residing in highly entrepreneurial neighborhoods are more likely to become entrepreneurs and invest more into their own businesses, even though their entrepreneurial profits are lower and their alternative job opportunities more attractive. Our results suggest that peer effects create nonpecuniary benefits from entrepreneurial activity and play an important role in the decision to become an entrepreneur. Alternative explanations, such as entry costs, social learning, and informal credit markets, are not supported by the data. [source] DISTANCE, BANK HETEROGENEITY AND ENTRY IN LOCAL BANKING MARKETS,THE JOURNAL OF INDUSTRIAL ECONOMICS, Issue 3 2008ROBERTO FELICI We examine the determinants of entry into Italian local banking markets during the period 1991,2002 and build a simple model in which the probability of branching in a new market depends on the features of both the local market and the potential entrant. Econometric findings show that banks are more likely to expand into those markets that are closest to their pre-entry locations. Large banks are also more able to cope with distance-related entry costs than small banks. Finally, banks have become increasingly able to open branches in distant markets, due to the advent of information and communication technologies. [source] DESIGNING A MARKET STRUCTURE WHEN FIRMS COMPETE FOR THE RIGHT TO SERVE THE MARKET,THE JOURNAL OF INDUSTRIAL ECONOMICS, Issue 3 2005Michel Mougeot In many industries, a regulator designs an auction to select ex-ante the firms that compete ex-post on the product market. This paper considers the optimal market structure when firms incur sunk costs before entering the market and when the government is not able to regulate firms in the market. We prove that a free entry equilibrium results in an excessive entry when the entry costs are private information. Then, we consider an auction mechanism selecting the firms allowed to serve the market and show that the optimal number of licences results in the socially optimal market structure. When all the potential candidates are actual bidders, the optimal number of firms in the market increases with the number of candidates and decreases with the social cost of public funds. When the market size is small, as the net profit in the market decreases with the number of selected firms, entry is endogenous. As increasing competition in the market reduces competition for the market, the optimal structure is more concentrated than in the previous case. [source] EXCESS-ENTRY THEOREM: THE IMPLICATIONS OF LICENSING*THE MANCHESTER SCHOOL, Issue 6 2008ARIJIT MUKHERJEE We show that, in the presence of technology licensing, entry in an industry with Cournot competition may lead to a socially insufficient, number of firms. Insufficient entry occurs if the own marginal cost of the entrant is sufficiently high. Hence, the justification for anticompetitive entry regulation due to the standard excess-entry result may not be justified in the presence of licensing. However, if the own marginal cost of the entrant is very low, licensing may create excessive entry for those entry costs where entry does not occur without licensing; thus licensing reduces social welfare though it increases competition. [source] Technological Capability and FDI in Asia: Firm-level Relationships among Japanese Manufacturers*ASIAN ECONOMIC JOURNAL, Issue 3 2005Eiichi Tomiura F23; L22 The present paper reexamines the relationship between technological capabilities and FDI decisions at the firm level. The data cover 118 300 Japanese firms in all manufacturing industries. The R&D of Japanese firms has a noticeably weaker relationship with FDI in Asia than with FDI in industrial countries. This finding is confirmed to be robust even when alternative estimation techniques are used and when R&D expenditure data are replaced by patent data. The estimation results also reveal non-negligible fixed entry costs for FDI, a finding consistent with the observation that only approximately 2 percent of the firms invest abroad. [source] |