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Bargaining Power (bargaining + power)
Selected AbstractsFINANCIAL CONTRACTING BETWEEN MANAGERS AND VENTURE CAPITALISTS: THE ROLE OF VALUE-ADDED SERVICES, REPUTATION SEEKING, AND BARGAINING POWERTHE JOURNAL OF FINANCIAL RESEARCH, Issue 4 2004Richard Fairchild Abstract I analyze manager and venture capitalist bargaining over the financial contract in the face of double-sided moral hazard problems. The allocation of cash flows depends on the combined effects of value-added services, reputation seeking, and bargaining power. Welfare is maximized when the venture capitalist has high value-adding capabilities, the market for reputation is informationally efficient, and the manager has bargaining power. Furthermore, I consider the effect of exit strategies on the financial agreement. I also consider bidding between venture capitalists of differing abilities. Generally, the superior venture capitalist wins with a lower bid, but in some cases the inferior venture capitalist can win. [source] The Effect of Underwriters' Reputationson Post-Deregulation IPO Pricing: Price Discovery Ability Versus Bargaining Power,ASIA-PACIFIC JOURNAL OF FINANCIAL STUDIES, Issue 4 2009Kang Heum Yon Abstract This study empirically examines the role of underwriters' reputations on the IPO pricing process and its effect on subsequent initial returns. We analyzed 275 IPOs between July, 2002 and December, 2006. The reputation of each underwriters was analyzed based on the data reflecting their performances over the preceding three years. The analysis considered the following: number of offerings, the natural logarithm of average offering size, the relative offering size, the inverse of average underpricing ratio, and the ratio of refraining from undertaking a market stabilization activity or exercising a putback option. The logarithm of the underwriter's asset size and the composite index of the above six reputation variables are included in the variable we call "reputation." We find that underwriters with higher reputation exercise more bargaining power than either issuing firms or institutional investors in the offer price decision process. On the other hand, the underwriters' certification role is not sufficiently carried out to build a reputation on price discovery. We propose an incentive system that would encourage voluntary assessment of underwriters' competency, which can ultimately bolster their reputations in terms of their price discovery ability. [source] Transfer Price Negotiation in the Presence of Unequal Bargaining Power: The Effect of a Peer Evaluation Scheme on Inter-divisional Profit DistributionAUSTRALIAN ACCOUNTING REVIEW, Issue 3 2009Mandy M. Cheng This study examines how managers balance economic incentives and inter-divisional equity considerations during transfer price negotiations. Our experiment shows that both buyers and sellers are willing to give up a significant amount of their profits to pursue a more equitable outcome (one that results in greater inter-divisional profit equalisation). We also find that incorporating peer evaluation schemes into negotiators' formal incentive plans has both economic and social-psychological impacts on negotiation behaviour, resulting in even greater inter-divisional profit equalisation. While this outcome may seem ,fairer' to the individual managers, from the firms' perspective profit equalisation can obscure divisional performance, potentially leading to resource allocation inefficiencies. [source] Bargaining power and efficiency,rural households in EthiopiaJOURNAL OF INTERNATIONAL DEVELOPMENT, Issue 7 2007Holger Seebens Abstract It appears to be clear from literature that bargaining power associated with greater control over household resources affects the share of an individual's consumption, that is, higher bargaining power leads to higher levels of consumption. However, it has remained unexplored, if and in which way bargaining power has an impact on household production. By applying different stochastic efficiency models, we try to fill this gap by investigating the role of the distribution of productive resources among 558 couples of rural Ethiopian households in determining the outcome of household production. The results clearly confirm that the more equal the allocation of resources, the higher the household's productivity which could be predominantly due to the incentives to participate efficiently in the production process. Copyright © 2007 John Wiley & Sons, Ltd. [source] Women in the Urban Informal Sector: Perpetuation of Meagre EarningsDEVELOPMENT AND CHANGE, Issue 2 2005Arup Mitra The argument of exploitation of women workers in the labour market notwithstanding, this article examines whether women in India are unable to participate fully in the labour market because they are required to combine their household activities with income yielding jobs. They are constrained to work in the neighbourhood of their residence (the location of the residence having been decided upon by male family members), and can access jobs only through informal contacts (which usually means they end up in jobs similar to those of the contact persons), both of which reduce their bargaining power considerably. The tendency for specialized activities to be concentrated in different geographic locations of a city further restricts the possibility of women workers being engaged in diverse jobs and thus aggravates the situation of an excess supply of labour in a particular activity. Constrained choice, limited contacts of women and physical segmentation of the labour market perpetuate forces that entrap women workers in a low-income situation with worse outcomes than those of their male counterparts. Consequently with greater intensity of work they still continue to receive low wages, while residual participation in the labour market restricts the possibilities of skill formation and upward mobility. All of these factors offer a substantive basis for policy recommendations. [source] Bargaining without a Common Prior,An Immediate Agreement TheoremECONOMETRICA, Issue 3 2003Muhamet Yildiz In sequential bargaining models without outside options, each player's bargaining power is ultimately determined by which player will make an offer and when. This paper analyzes a sequential bargaining model in which players may hold different beliefs about which player will make an offer and when. Excessive optimism about making offers in the future can cause delays in agreement. The main result states that, despite this, if players will remain sufficiently optimistic for a sufficiently long future, then in equilibrium they will agree immediately. This result is also extended to other canonical models of optimism. [source] Unobservable Investment and the Hold-Up ProblemECONOMETRICA, Issue 2 2001Faruk Gul We study a two-person bargaining problem in which the buyer may invest and increase his valuation of the object before bargaining. We show that if all offers are made by the seller and the time between offers is small, then the buyer invests efficiently and the seller extracts all of the surplus. Hence, bargaining with frequently repeated offers remedies the hold-up problem even when the agent who makes the relation-specific investment has no bargaining power and contracting is not possible. We consider alternative formulations with uncertain gains from trade or two-sided investment. [source] Discretion in Tax EnforcementECONOMICA, Issue 283 2004Luigi Alberto Franzoni This paper deals with the issue of whether the Revenue Service (RS) should be allowed, or even encouraged, to negotiate settlement agreements with taxpayers subject to examination. We consider the case in which the RS enjoys discretion at the settlement stage, its stance being guided by officers' professional judgment. We show that discretionary settlements serve a desirable function, as they allow the RS to better exploit taxpayer-specific information and to take advantage of the bargaining power it can wield at the negotiation stage. [source] Governing Elites, External Events and Pro-democratic Opposition in Hong Kong (1986,2002)GOVERNMENT AND OPPOSITION, Issue 4 2003Ming Sing While China has been the most important constraint on Hong Kong's democratization, another neglected constraint has been the limited mobilization power of the pro-democracy opposition in both civil and political society for most of the period from 1984 to 2002. The mobilization power of the pro-democracy opposition, mediated by their degree of internal unity and ability to capitalize on external political opportunities, affected its overall bargaining power vis-à-vis the Chinese and British government over democratization in different phases. The self-censorship among Hong Kong's media, plus economic recession since the Handover, further sapped the mobilization and bargaining power of pro-democratic forces. [source] Bargaining, Bonding, and Partial OwnershipINTERNATIONAL ECONOMIC REVIEW, Issue 3 2000Sudipto Dasgupta This article provides a theory of interfirm partial ownership. We consider a setting in which an upstream firm can make two alternative types of investment: either specific investment that only a particular downstream firm can use or general investment that any downstream firm is capable of using. When the benefits from specific and general investments are both stochastic, equity participation by the downstream firm in the upstream firm can lead to more efficient outcomes than take-or-pay contracts. The optimal ownership stake of the downstream firm is less than 50 percent under a natural assumption about relative bargaining power. [source] Delegating Differences: Bilateral Investment Treaties and Bargaining Over Dispute Resolution ProvisionsINTERNATIONAL STUDIES QUARTERLY, Issue 1 2010Todd Allee Bilateral investment treaties (BITs) have become the dominant source of rules on foreign direct investment (FDI), yet these treaties vary significantly in at least one important respect: whether they allow investment disputes to be settled through the International Centre for the Settlement of Investment Disputes (ICSID). Through the compilation and careful coding of the text of nearly 1,500 treaties, we identify systematic variation in "legal delegation" to ICSID across BITs and explain this important variation by drawing upon a bargaining framework. Home governments prefer and typically obtain ICSID clauses in their BITs, particularly when internal forces push strongly for such provisions and when they have significantly greater bargaining power than the other signatory. Yet some home governments are less likely to insist upon ICSID clauses if they have historical or military ties with the other government. On the other hand, although host governments are often hostile toward ICSID clauses, particularly when sovereignty costs are high, they are more likely to consent to such clauses when they are heavily constrained by their dependence on the global economy. Our findings have significant implications for those interested in FDI, legalization, international institutions, and interstate bargaining. [source] How Americans Think About Trade: Reconciling Conflicts Among Money, Power, and PrinciplesINTERNATIONAL STUDIES QUARTERLY, Issue 2 2001Richard K. Herrmann Trade has again emerged as a controversial issue in America, yet we know little about the ideas that guide American thinking on these questions. By combining traditional survey methods with experimental manipulation of problem content, this study explores the ideational landscape among elite Americans and pays particular attention to how elite Americans combine their ideas about commerce with their ideas about national security and social justice. We find that most American leaders think like intuitive neoclassical economists and that only a minority think along intuitive neorealist or Rawlsian lines. Among the mass public, in contrast, a majority make judgments like intuitive neorealists and intuitive Rawlsians. Although elite respondents see international institutions as promising vehicles in principle, in practice they favor exploiting America's advantage in bilateral bargaining power over granting authority to the World Trade Organization. The distribution of these ideas in America is not arrayed neatly along traditional ideological divisions. To understand the ideational landscape, it is necessary to identify how distinctive mentaal models,mercantilist, neorealist, egalitarian, and neoclassical economic,sensitize or desensitize people to particular aspects of geopolitical problems, an approach we call cognitive interactionism. [source] Institutional Stimulation of Deliberative Decision-Making: Division of Labour, Deliberative Legitimacy and Technical Regulation in the European Single MarketJCMS: JOURNAL OF COMMON MARKET STUDIES, Issue 5 2008THOMAS GEHRING Institutions stimulate deliberative decision-making if they hinder stakeholders from introducing bargaining power into the decision process. This article explores the conditions for, and limits of, the creation of deliberative legitimacy in single market regulation. An assessment of the standardization procedure demonstrates that legitimacy arises only from the combination of political and technical deliberation. [source] Bargaining and Efficiency in SharecroppingJOURNAL OF AGRICULTURAL ECONOMICS, Issue 2 2001Jon Reiersen In this paper the Nash bargaining solution is used to derive solutions for the rental share and labour input in sharecropping. The bargaining is modeled as a two-stage process. First there is a bargain about the rental share, and then a bargain about labour input. The power of the landlord to ensure an outcome favourable to himself may differ in the two stages. By imposing particular assumptions about this bargaining power, some popular models of sharecropping, that have been treated as completely separate in the literature, can be derived as special cases in our model. However, we also generate a new class of models. It is also demonstrated that it is not the tenant's influence in the labour input decision per se which causes inefficiency in sharecropping, but differences in the tenant's influence over different issues in the contract. This is in contrast to the popular view which states that if the tenant controls the level of labour input, sharecropping will result in an inefficient resource allocation. [source] Fairness and bargaining power in threshold public goods experimentsJOURNAL OF BEHAVIORAL DECISION MAKING, Issue 2 2008Li-Chen Hsu Abstract Experiments on three two-person threshold public good provision games, namely, the simultaneous, sequential, and dictator games, are conducted to explore the motives behind giving. Players who move simultaneously are endowed with equal bargaining power, and players who move first are endowed with more bargaining power than players who move subsequently. Dictators are indubitably endowed with complete bargaining power. Since the differences between the bargaining powers of two players increase from the simultaneous to the sequential to the dictator game, comparisons among games allow us to trace whether the contribution behavior is motivated by fairness or is simply due to the strategic concern. The experimental evidence shows that the strategic concern explains the overall contribution behavior better than the motive of fairness. However, in the final round 26% of the dictators share the threshold evenly with their opponents, suggesting that some subjects do play fairly. Copyright © 2007 John Wiley & Sons, Ltd. [source] Incumbency and R&D Incentives: Licensing the Gale of Creative DestructionJOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Issue 4 2000Joshua S. Cans This paper analyzes the relationship between incumbency and R&D incentives in the context of a model of technological competition in which technologically successful entrants are able to license their innovation to (or be acquired by) an incumbent. That such a sale should take place is natural, since postinnovation monopoly profits are greater than the sum of duopoly profits. We identify three key findings about how innovative activity is shaped by licensing. First, since an incumbent's threat to engage in imitative R&D during negotiations increases its bargaining power, there is a purely strategic incentive for incumbents to develop an R&D capability. Second, incumbents research more intensively than entrants as long as (and only if) their willingness to pay for the innovation exceeds that of the entrant, a condition that depends critically on the expected licensing fee. Third, when the expected licensing fee is sufficiently low, the incumbent considers entrant R&D a strategic substitute for in-house research. This prediction about the market for ideas stands in contrast to predictions of strategic complementarity in patent races where licensing is not allowed. [source] What Do Corporate Default Rules and Menus Do?JOURNAL OF EMPIRICAL LEGAL STUDIES, Issue 2 2009An Empirical Examination Much of corporate law consists of nonmandatory statutes. Although scholars have examined the effect of nonbinding corporate law from a theoretical perspective, only inconclusive event studies explore the real-world impact of these laws. This article empirically examines the impact of nonmandatory state anti-takeover statutes. Several conclusions emerge. Despite its nonbinding nature, corporate law makes an enormous difference in outcomes, contradicting those who claim that corporate law is trivial. Two types of nonmandatory corporate laws have particularly important effects. Corporate default laws that favor management are considerably less likely to be changed by companies than default laws favoring investors, supporting those who believe that corporate default laws can ameliorate asymmetries in incentives or bargaining power between managers and investors. Corporate "menu" laws,opt-in laws that are drafted by the state but do not apply as default rules,also facilitate the use of some provisions, supporting those who believe that nonmandatory corporate law reduces transaction costs, such as the cost of updating corporate charters to reflect developments in the economy. [source] Bargaining power and efficiency,rural households in EthiopiaJOURNAL OF INTERNATIONAL DEVELOPMENT, Issue 7 2007Holger Seebens Abstract It appears to be clear from literature that bargaining power associated with greater control over household resources affects the share of an individual's consumption, that is, higher bargaining power leads to higher levels of consumption. However, it has remained unexplored, if and in which way bargaining power has an impact on household production. By applying different stochastic efficiency models, we try to fill this gap by investigating the role of the distribution of productive resources among 558 couples of rural Ethiopian households in determining the outcome of household production. The results clearly confirm that the more equal the allocation of resources, the higher the household's productivity which could be predominantly due to the incentives to participate efficiently in the production process. Copyright © 2007 John Wiley & Sons, Ltd. [source] Delegation and Wage Determination in Trade UnionsLABOUR, Issue 3 2000Laszlo Goerke Delegation of wage determination is modelled as the transferral of decision-making rights to better-informed agents. The rank and file of trade unions has less information and can, therefore, benefit from delegation. However, delegation might be disadvantageous for union members, since delegates pursue their own objectives. Also, delegates might incur a utility reduction, since becoming a delegate implies forfeiting a better-paid outside option. We investigate under what conditions delegation of wage bargaining power is beneficial for union members and their potential leaders. The wage and employment effects of delegation are derived. [source] Strong Societies, Wed Parties: Regime Change in Cuba and Venzula in the 1950s and TodayLATIN AMERICAN POLITICS AND SOCIETY, Issue 2 2001Jauier Cowales ABSTRACT The literature on the origins of democratic institutions is split between bottom-up and top-down approaches. The former emphasize societal factors that press for democracy; the latter, rules and institutions that shape elites' incentives. Can these approaches be reconciled? This article proposes competitive political parties, more so than degrees of modernization and associationalism, as the link between the two. Competitive political parties enhance society's bargaining power with the state and show dominant elites that liberalization is in their best interest; the parties are thus effective conduits of democracy. In the context of party deficit, the prospects for democratization or redemocratization are slim. This is illustrated by comparing Cuba and Venezuela in the 1950s and 1330s. [source] Divorce Israeli Style: Professional Perceptions of Gender and Power in Mediated and Lawyer-Negotiated DivorcesLAW & POLICY, Issue 2 2006BRYNA BOGOCH This study examines how the power of women is constructed by divorce professionals in a divorce process that is governed by rabbinical family law, the egalitarian ideology of the recently established family courts, and the growing use of mediation in divorce disputes. It is based on 254 questionnaires and 57 interviews with lawyers, mediators, and lawyer-mediators. We found that except for a minority of women lawyers, practitioners claimed that women were not disadvantaged by family law, and that mediation does not adversely affect weaker parties. However, their reactions to hypothetical situations indicated that rabbinical law does matter for women's bargaining power, and for lawyers' recommendations for mediation. This study reveals the complexities of the social construction of gender and power in divorce negotiations and the role of women professionals in empowering divorcing women. [source] ENDOGENOUS TECHNOLOGICAL INNOVATION, CAPITAL ACCUMULATION AND DISTRIBUTIONAL DYNAMICSMETROECONOMICA, Issue 4 2004Gilberto Tadeu Lima ABSTRACT This paper develops a post-Keynesian dynamic model of accumulation, growth and distribution in which endogenous technological innovation plays a significant role. Firms' rate of labour-saving technological innovation is made to depend non-linearly on the distributive (wage and profit) shares, with the latter determining both the incentives to innovate and the availability of funding to carry it out. As it turns out, the direction and the intensity of the effect of a change in distribution on the rates of accumulation and growth depend on the prevailing distribution, with a similar dependence applying,alongside the relative bargaining power of capitalists and workers,to the dynamic stability properties of the system. Hence, the model does not rely on full capacity utilization being reached for a change in the accumulation and growth regime to take place. [source] A Cournot,Nash Model of Family Decision MakingTHE ECONOMIC JOURNAL, Issue 474 2001Zhiqi Chen This paper models a two-person family. Each family member is utility maximising, yet family members are interdependent because of caring and public goods within the family. The two family members' interdependent utility maximisation problems are first solved using a non-cooperative, or Cournot,Nash, game theoretic framework. The Cournot,Nash equilibrium is then used as a threat point in a bargaining game. The paper provides a rigorous derivation of the properties of household demands, a full analysis of the determinants of intra-household resource allocation, including the effect of varying household bargaining power, and consideration of policy implications. [source] Capital Structure as a Strategic Variable: Evidence from Collective BargainingTHE JOURNAL OF FINANCE, Issue 3 2010DAVID A. MATSA ABSTRACT I analyze the strategic use of debt financing to improve a firm's bargaining position with an important supplier,organized labor. Because maintaining high levels of corporate liquidity can encourage workers to raise their wage demands, a firm with external finance constraints has an incentive to use the cash flow demands of debt service to improve its bargaining position with workers. Using both firm-level collective bargaining coverage and state changes in labor laws to identify changes in union bargaining power, I show that strategic incentives from union bargaining appear to have a substantial impact on corporate financing decisions. [source] FINANCIAL CONTRACTING BETWEEN MANAGERS AND VENTURE CAPITALISTS: THE ROLE OF VALUE-ADDED SERVICES, REPUTATION SEEKING, AND BARGAINING POWERTHE JOURNAL OF FINANCIAL RESEARCH, Issue 4 2004Richard Fairchild Abstract I analyze manager and venture capitalist bargaining over the financial contract in the face of double-sided moral hazard problems. The allocation of cash flows depends on the combined effects of value-added services, reputation seeking, and bargaining power. Welfare is maximized when the venture capitalist has high value-adding capabilities, the market for reputation is informationally efficient, and the manager has bargaining power. Furthermore, I consider the effect of exit strategies on the financial agreement. I also consider bidding between venture capitalists of differing abilities. Generally, the superior venture capitalist wins with a lower bid, but in some cases the inferior venture capitalist can win. [source] Why Do Suppliers Charge Larger Buyers Lower Prices?THE JOURNAL OF INDUSTRIAL ECONOMICS, Issue 1 2001Rajeev K. Tyagi The phenomenon of input suppliers charging larger buyer firms, relative to smaller buyer firms, lower prices is commonly explained in terms of supplier economies of scale, supplier competition for larger buyers, and the larger bargaining power of larger buyers. This paper provides an alternative explanation, and shows that the observed direction of differential pricing can benefit the supplier by lowering the level of tacit collusion its buyers can sustain in their output market. This result also provides a new mechanism through which a ban on price discrimination by input suppliers may lower consumer welfare. [source] COMPETITION AND WELFARE: THE IMPLICATIONS OF LICENSING,THE MANCHESTER SCHOOL, Issue 1 2010ARIJIT MUKHERJEE If firms with asymmetric costs can engage in technology licensing, we show that welfare may be higher under Cournot competition than under Bertrand competition. Under fixed-fee licensing, consumer surplus and welfare are higher under Cournot competition if the technological difference between the firms is moderate. Under royalty licensing, if the bargaining power of the licenser is not very high and the technological difference between the firms is large, consumer surplus and welfare are higher under Cournot competition. We also show that technology licensing has important implications on the profit differential between Bertrand and Cournot competition. [source] WHOLESALE PRICING WHEN BUYERS ARE ASYMMETRIC COURNOT COMPETITORS,THE MANCHESTER SCHOOL, Issue 2 2006GIUSEPPE COLANGELO This paper focuses on the pricing policy of a well-informed profit- maximizing producer selling to asymmetric retailers who compete à la Cournot. An optimal upstream two-part tariff implies the exit of the inefficient retailer, thus causing downstream monopolization. When this would bring about a significant increase in the efficient retailer's bargaining power, as is plausible, the producer will try to avoid this and consequently choose a pricing scheme that does not cause downstream monopolization. When this is the case, two alternatives emerge: a two-part tariff (ensuring no downstream monopolization) or third-degree price discrimination. The more asymmetric in cost retailers are (consistent with no downstream monopolization), the more likely it is to see third-degree price discrimination as the equilibrium wholesale pricing. When third-degree price discrimination is implemented, a welfare loss is easily produced. [source] Bargaining Credibility and the Limits to Within-firm PensionsANNALS OF PUBLIC AND COOPERATIVE ECONOMICS, Issue 4 2003by Jan Erik Askildsen The roles of this commitment level plus bargaining power, and the ability of a failing firm to misappropriate pensions funds, are studied and their influence on the equilibrium pension determined. [source] The Effect of Underwriters' Reputationson Post-Deregulation IPO Pricing: Price Discovery Ability Versus Bargaining Power,ASIA-PACIFIC JOURNAL OF FINANCIAL STUDIES, Issue 4 2009Kang Heum Yon Abstract This study empirically examines the role of underwriters' reputations on the IPO pricing process and its effect on subsequent initial returns. We analyzed 275 IPOs between July, 2002 and December, 2006. The reputation of each underwriters was analyzed based on the data reflecting their performances over the preceding three years. The analysis considered the following: number of offerings, the natural logarithm of average offering size, the relative offering size, the inverse of average underpricing ratio, and the ratio of refraining from undertaking a market stabilization activity or exercising a putback option. The logarithm of the underwriter's asset size and the composite index of the above six reputation variables are included in the variable we call "reputation." We find that underwriters with higher reputation exercise more bargaining power than either issuing firms or institutional investors in the offer price decision process. On the other hand, the underwriters' certification role is not sufficiently carried out to build a reputation on price discovery. We propose an incentive system that would encourage voluntary assessment of underwriters' competency, which can ultimately bolster their reputations in terms of their price discovery ability. [source] | ||||||||||||||||||||||||||||