Free Market Environment Research Articles

Digital transformation and innovation output of manufacturing companies-An analysis of the mediating role of internal and external transaction costs.

Digital transformation, based on digital technologies, has triggered economic growth in many industries and brought about production and service transformation in the manufacturing sector. As an important source of innovation output and a driving force for national economic development, it is of great significance to study the impact of digital transformation on innovation output in manufacturing companies. This study analyzes the effects of digital transformation on the quality, quantity, and overall innovation output of manufacturing companies from both the macro provincial-level digital transformation and micro enterprise-level digital transformation perspectives. Additionally, using data from manufacturing companies listed on the Shanghai and Shenzhen stock exchanges from 2012 to 2022, this study empirically tests the mechanism through which digital transformation affects innovation output from the perspectives of internal transaction costs and external transaction costs. The results show that digital transformation promotes overall improvement in innovation output of manufacturing companies and leads to improvements in both the quality and quantity of innovation output. Furthermore, the study finds that the effect of digital transformation on innovation output has a nonlinear characteristic under different levels of market competitiveness and market freedom. The mediation analysis reveals that the influence of digital transformation on innovation output can be attributed to the reduction of internal transaction costs and the enhancement of external transaction efficiency. In terms of digital policy formulation, it is necessary to coordinate the development of diverse and innovative digital infrastructure at the macro level with the micro-level ecosystems of enterprises, in order to reduce transaction costs within and outside innovative entities. Ultimately, it is essential for the government to foster a conducive free market environment that enhances transaction efficiency and timely regulates the excessive competition resulting from oligopolistic monopolies, thus maximizing the potential of digital transformation in promoting innovation output.

Techno-Economic Analysis of Electrochemical Refineries Using Solid Oxide Cells for Oxidative Coupling of Methane

With the shift away from fossil resources, there is a need for alternative pathways to carbon-based commodities such as ethylene. The electrochemical oxidative coupling of methane (OCM) enables the synthesis of higher hydrocarbons from simple organic molecules i.e., methane and has the potential to replace conventional ethylene production in the future. However, current solid oxide OCM cell development is still in an early stage and more comprehensive system-level analyses are needed to better understand operating conditions and economics to guide research and development. For this purpose, process models and new integration strategies for the electrochemical OCM process were developed. The integration of the electrochemical OCM unit into the plant revealed to be challenging based on current solid oxide cell designs and will be discussed as part of this presentation. The performance of the OCM plant is benchmarked against current state-of-the-art ethane steam cracker plants. In this context, key performance metrics are efficiency, direct and indirect carbon dioxide emissions, power consumption, plant cost and cost of ethylene. Of particular interest are aspects of hydrogen co-production and carbon dioxide utilization as well as the impact of carbon dioxide emission factors from the grid, which have shown to be of particular importance for electrochemical processes. Moreover, critical aspects of heat integration will be discussed including fuel pre-heating, carbon deposition and thermal cell management. The analysis will provide new insights into economic cost driving factors and the impact of cell cost, current density, overpotentials and Faraday efficiency upon the cost of ethylene. Based upon this information, performance targets will be recommended that will allow electrochemical OCM to become economically competitive in a free market environment.

COVID-19, Financing Constraints and Total Factor Productivity of Enerprises

<p class="MsoNormal" style="text-align: justify;">As the COVID-19 epidemic swept the world in early 2020, it is worth watching how it affects the total factor productivity of enterprises. Based on the theory of information asymmetry and the data of A-share listed companies from 2014 to 2021, this paper conducts an empirical study on the relationship between COVID-19 and the total factor productivity of enterprises. The results show that the impact of the COVID-19 epidemic can significantly reduce the total factor productivity of enterprises, and the conclusion is still true after a series of robustness tests. Taking the financing constraint as an intervening variable, it clearly reveals a transmission mechanism, that is to say, the impact of the COVID-19 epidemic exacerbates the financing constraint of the enterprise, thus it makes the total factor productivity of the enterprise reduce. It is further found that the above effects are more obvious for small and medium-sized enterprises and non-intelligent enterprises. Based on this, the government should implement some active economic development policies to create a free, relaxed and orderly market environment for enterprise financing. At the same time, enterprises should not only pay attention to digital and intelligent development, and transform into technology-intensive enterprises, but also strengthen the awareness of worry. Enterprises should store "more grain" for preparing for the cold winter.</p>

The Role of the State in the Anti-Crisis Management of the Economy In Georgia

The government's role in pulling the country out of the crisis is critical. It has the main responsibilities in: maintaining peace in society, normal living and working conditions; fostering business growth, attracting investment, increasing productivity and exports.Proper anti-crisis management can mitigate challenges by aligning the interests of both owners and employees, the public and the state, and by sustaining the long-term balance of the economy.The source of economic development is technological progress, which should be stimulated by the state and big business with the support of broad sections of society. Technological advancement requires massive amounts of capital owned by large corporations and monopolies. Even in a free market environment, without state regulation, technological progress would be counterproductive. Research in universities should be developed and support is required for this. The fundamental values of the State should be: the rule of law, the establishment of order; the development of democracy and the protection of property rights.The short-term goal of the Georgian government's economic policy should be: to minimize the losses caused by the Covid-19 pandemic; to recover and ensure rapid economic growth.In the medium term, the ultimate objectives should be: enhancing regional and international competitiveness; facilitating truly sustainable production and exports; promoting domestic and foreign investment.It is vital to maintain the goodwill of the society and to satisfy their needs. The powers should be clearly dispersed in a crisis situation. Public interests must be granted preference over private interests. Minor injustices will lead to a socioeconomic explosion unless jobs are preserved as much as possible in order to achieve the stability of the internal climate. The public should trust and continually feel the support of government initiatives. Otherwise, fluctuations will become inevitable.

Determinants of shadow economy in OIC and non-OIC countries: the role of financial development

PurposeThe purpose of this paper is to empirically investigate the determinants and the impact of financial development on shadow economy in OIC countries and then compared with non-OIC countries.Design/methodology/approachThe study applies advanced panel GMM technique.FindingsThe study finds that macro-variables (unemployment, economic growth, money supply and foreign trade) and institutional variables reduce shadow economy both in OIC and non-OIC countries. The study also explores that financial development mitigates shadow economy; however, its impact is significantly less in case of OIC economies compared to the non-OIC countries.Research limitations/implicationsSince the focus of this study is OIC countries vs non-OIC countries, the research only includes discussion about shadow economy in 42 OIC member states and 99 non-OIC economies. The decision to restrict the study to 42 OIC economies and 99 non-OIC nations is due to the availability of data.Practical implicationsThe study suggests that free market and good business environment in the formal economy are the keys to have less shadow economy. Good institutional setup and ease in regulations can attract firms and businesses from informal sector to the official economy, while political instability is one of the main factors for having large size of shadow economy.Social implicationsThe OIC member countries should implement policies which improve accessibility to finance of every citizen of the country.Originality/valueDespite the growing importance of shadow economy, the literature investigating determinants and the role of financial development in shadow economy is scarce. To the best of the authors' knowledge, there is no literature that examined the shadow economy in the context of OIC member countries. Furthermore, this study has covered a large number of OIC and non-OIC economics over time and across different groups using largest data and advanced panel GMM techniques.

Will clean energy investments provide a more sustainable financial ecosystem? Less carbon and more democracy

This paper studies the impact of oil prices on financial market volatilities and clean energy investments by including the energy democracy approach to its analysis. Our main intention is to question whether a carbon free sustainable financial market environment. Since crude oil is still the primary energy source and the markets heavily depend on oil prices, any surge in the prices creates uncertainty and increases the fear in the markets. In this study, we contribute to the existing literature in two ways. First, rather than seeking a direct relationship with oil-clean energy returns, we include market fear represented by CBOE volatility index (VIX) to our models. Secondly, we utilize VAR-VECH-TARCH models with three different model systems and two different VAR system specifications for two different time periods. According to our asymmetric volatility model results, long-term volatility spillovers exist between clean energy, brent oil and volatility index. Moreover, considering the cross relationship between clean energy, brent oil and VIX, bad news contributes more to the systemic risk of energy company stock returns than good news. These findings state that the relationship between energy democracy and clean energy investments should be considered in more details while policy implications should support renewable energy investment policies and reduce the pressure of oil suppliers on both financial markets and clean energy investments.

НАУКОВІ ЗАСАДИ ПРОМИСЛОВОЇ ПОЛІТИКИ: ЗАРУБІЖНИЙ ДОСВІД

The article discusses the viewpoints of international scholars as to the scientific premises of industrial policy. The industrial policy concept has revealed a wide variety in its understanding. The study provides insights into the evolution of scientific thought and the development of scholarly approaches to understanding of the above concept in the USA and Europe, the most developed economies in the world, where economic theory has been underpinned by considerable scientific debate. The paper offers an ‘industrial policy’ term definition based on the key economic trends and the share of government intervention into industry development. To address the research agenda, a comparative approach and an analytic interpretation method were employed that allowed for identifying the differences in factors that had affected the background for elaborating a range of scientific concepts. The study explores extensive theoretical endeavors all over the world for understanding the industrial policy concept which demonstrates ample scientific discussion on the role of government in economic processes. The fundamental rationale for generalizing the variety of research studies is the compehension of the relationship between economic processes and the government policy in the economy domain. Such approach incorporates the government paternalism towards industry development (embedded in the neoclassical studies of American economists and neoliberal interpretations of the governance function in the industrial sector) and building a competitive economy by enhancing production incentives in a free market environment. The research findings have identified two key vectors in the scientific viewpoints of international scholars, i. e. "vertical" and "horizontal" understanding of the industrial policy concept. The former vector reflects the economic ideology of paternalism, built on protectionism, while the latter demonstrates a neoliberal approach based on industrial sector competitiveness. The implications for further research are outlined as investigating correlations of the effects from government involvement and market factors in a competitive environment.

An (Almost) Perfectly Competitive Health Care Model for Patients that Minimizes Cost, Maximizes Satisfaction, Manages Medical Payments, and Generates Health Care Competition

The American health care system does not operate in an actual free market environment. The patient cannot manage his or her healthcare services and control his or her costs. This paper will discuss three of the requirements for perfect competition: (1) Many buyers, (2) Many sellers and (3) Perfect information. The meeting place for the solution to these requirements will generate an almost perfectly competitive market for medicine and return almost complete control to the patient. This meeting place will be an online auction/marketplace service. The service will act as a reverse auction or marketplace with competing providers bidding down prices to fill available slots in their services. The system will use current medical coding numbers to allow comparative pricing. Services can be bundled or sought individually by both the patient and the provider. Patients can choose how long to wait, how far to travel, and how much they want to pay before deciding on the provider.

An analysis of premium payments as a mechanism for securing preferential service in cloud manufacturing

Paying a premium in a cloud manufacturing free market environment will benefit a customer during steady state scenarios, however during disruption this benefit diminishes to zero; dependent on the degree of disruption. These customers will recover quicker from disruptions, but the returns are small compared to the relative increase in cost. A cloud manufacturing scenario without contracts or preferential supply acts as a free market, this significantly increases supply chain risk. The predominant mechanism available to mitigate supply chain risk is the willingness to pay a premium. Agent-based simulation modelling experiments investigated this scenario using an extension of anarchic manufacturing for scheduling and control. The experiments induced a disruptive demand-side step change in requirement mix of capabilities and volume demanded by all customers. One customer was willing to pay a significant premium to the others. The waiting time (non-operating time) was analysed as the benefit and indicator for supply chain performance. The job cost for the customer willing to pay a premium relative to other customers and the relative waiting time were analysed during steady state, disruption, and recovery periods.

Esso Australia’s long-term contribution to the east coast gas market

This year marks the golden jubilee of Australia’s offshore petroleum industry after the first gas was produced from Bass Strait by Esso and BHP’s Gippsland Basin Joint Venture. For half a century our industry has been driven by technology – pioneering technical excellence and pushing the envelope in the pursuit of much needed oil and gas production. Today, the landscape in East Australia is changing and gas is at the forefront of the discussion. Declines in East Australia’s historical conventional fields have seen gas supply tighten and prices rise. There is a strong need for additional affordable and reliable gas supply. While continued improvements in technology remain a critically important enabler in developing Australia’s gas resources; global supply and demand, regulatory frameworks, and the commercial arrangements that underpin new developments are becoming more and more important. ExxonMobil Australia’s new Chairman, Nathan Fay, has a wealth of experience working with gas markets around the world. He will explain why it is so important for policymakers to establishment a stable free market environment to encourage these long-term relationships. To view the video, click the link on the right.

Can Forecasting Be Useful with Today's Unpredictable Business Environment?

It is known that if information is the currency of the current digital age, then knowledge is the coin of the realm. As the plethora of information swells, management and employees may find themselves drowning in it. The surfeit of information comes at a time when companies the world over are challenged to become more nimble in the face of change. The market volatility of the past year has highlighted in sometimes painful fashion the need for companies to anticipate and address pivotal events that affect their business. Therefore, planning for the unpredictable may seem an impossible irony, but many organisations appear to recognise that in a period of turbulence, an organisation’s ability to flex and respond is critical for sustaining financial growth. Why is agility so important? Weill (2009) explains: “When I was a kid, the most successful companies were monopolies or duopolies, but in today’s globalised, free-market environment, the ability to satisfy customer expectations is core to profitability. If you’re not agile, you can’t do it, because customer expectations are never static.” The importance of being quick to leverage information resounds throughout the survey results. An overwhelming majority of executives (88%) cite organisational agility as key to global success. Thus paper discusses the issue of panning in today’s business unpredictable environment.

How much inequality in income is fair? A microeconomic game theoretic perspective

The increasing inequality in income and wealth in recent years, and the associated excessive pay packages of CEOs in the US and elsewhere, is of growing concern among policy makers as well as the common person. However, there seems to be no satisfactory answer, in conventional economic theories and models, to the fundamental questions of what kind of income distribution we ought to see, at least under ideal conditions, in a free market environment, and whether this distribution is fair. We propose a novel microeconomic game theoretic framework that addresses these questions and proves that the lognormal distribution is the fairest inequality of pay in an organization comprising of homogeneous agents, under ideal free market conditions at equilibrium. We also show that for a population of two different classes of agents, the equilibrium distribution is a combination of two different lognormal distributions where one of them, corresponding to the top ∼3–5% of the population, can be misidentified as a Pareto distribution. We compare our predictions with empirical data on global income inequality trends provided by Piketty and others. Our analysis suggests that the Scandinavian countries, and to a lesser extent Switzerland, Netherlands and Australia, have managed to get close to the ideal distribution for the bottom ∼99% of the population, while the US and UK remain less fair at the other extreme. Other European countries such as France and Germany, and Japan and Canada, are in the middle. Our theory also shows the deep and direct connection between potential game theory and statistical mechanics through entropy, which we identify as a measure of fairness in a distribution. This leads us to propose the fair market hypothesis, that the self-organizing dynamics of the ideal free market, i.e., Adam Smith’s “invisible hand”, not only promotes efficiency but also maximizes fairness under the given constraints.

Impact of China’s cooperation: the case of Chinese garages in Tanzania

Purpose – The purpose of this paper was to investigate China ' s motive for its relations with Africa. Within that broad framework, the paper investigates China–Tanzania cooperation from an economic and social development perspective. It analyses the status of Chinese investments and, more specifically, it focuses on the increasing numbers of Chinese garages and assesses whether they have positive spill-over towards achievement of sustainable development. Design/methodology/approach – Case study was used; it involves an up-close, in-depth and detailed examination of the growth of Chinese garages in Tanzania, as well as its related contextual conditions including the overall impact of foreign direct investment (FDI) on the vehicle repair sector in Tanzania. Scholarly works from various sources including researchers as well as authoritative reports were consulted. Findings – The paper shows that there is an increase in Chinese garage investment which has brought significant benefits such as technology spill-over, increased employment albeit at low-level pay as well as functioning as a stimulus for Tanzanian self-employment. Practical implications – A free market environment which attracts significant FDI including Chinese garages should be strengthened. Chinese garages should not employ Chinese when there are Tanzanians with required expertise. Further research on the long history of relations between Tanzania and Scandinavian countries is better for comparison. Originality/value – The paper presents original findings based on scholarly work related to the growth of Chinese garage investments in Tanzania.

Monopoly and competition on Bulgarian pension market

Challenges facing social security system in Bulgaria occurred as a result of radical political and economic changes after 1989 call for a reform and a new philosophy in the social security system. Multi-pillar pension system was introduced and the operation of private pension insurance companies was launched. Amid deepening demographic crisis and worsening economic climate the future role of supplementary pension insurance is essential for the achievement of expected results of the pension reform. The article’s main goal is to study how pension insurance companies in Bulgaria operate in the free market environment. To achieve this goal the following tasks are completed: ● Analyzed are the market concentration and market shares of the pension insurance companies and the net assets managed by them from mandatory and voluntary funds; ● Analyzed are some of the existing problems and measures are proposed to overcome them. The methods utilized during the study are the system approach, statistical evaluations, analysis and synthesis, comparison methods and others.

Potential of vertical and horizontal integration in the Hungarian fish product chain

After the economic and political transformation, the output and resource utilization of the Hungarian fish production sector decreased less than in other livestock sectors, and it managed to preserve its income position. As a consequence of the relatively low level of the implemented innovative developments, though, for all the EU assistance available the cooperation efforts did not prove to be very efficient. The relatively favourable income position of several farms led them to a kind of “leisureliness”, and as a result, the level of the applied production technology in many cases did not even reach that of the 1970s. All these circumstances led to the degradation of the innovations and to the expiration of the horizontal and vertical integrations in the sector, leaving the commercial and cooperation forms being typical in an otherwise stabile classical free-market environment. Problems were further increased – amongst other things – by the volatile cereal prices, 27% VAT rate, and the introduction of road toll. After long years, certain farms were to face losses, and the decline of profitability at sectorial level, thus the need for innovation and producers’ co-operations has become imperative. As a solution option to these problems, a model of a product chain containing both horizontal and vertical elements and comprising the entire sector has been developed. Present study introduces this new model, which is established on foreign examples primarily, but takes the Hungarian specialities into account too.

Some Special Features of the Current Financial Policy and a Review of Taxation Regulatory Documents Issued in the Period of July-August 2013

It is impressive what the Supreme Arbitration (Commercial) Court of the Russian Federation (the SAC of Russia) managed to achieve in order to adapt Russia’s law enforcement practices to a free-market environment against general uncertainty regarding the state financial policy. First of all, measures to establish relationship between the Russian legislation and international practices in the context of economic and financial regulation are worth mentioning. In the period under review, the SAC of Russia followed up the issues which are relevant for the benefit of Russia’s budget. The SAC of Russia managed to successfully develop decisions, which are universal from the international law point of view, on making Russian regulations applicable to Russian and foreign parties to legal proceedings.

Estimation of Power/Energy Losses in Electric Distribution Systems based on an Efficient Method

Estimation of the power/energy losses constitutes an important tool for an efficient planning and operation of electric distribution systems, especially in a free energy market environment. For further development of plans of energy loss reduction and for determination of the implementation priorities of different measures and investment projects, analysis of the nature and reasons of losses in the system and in its different parts is needed. In the paper, an efficient method concerning the power flow problem of medium voltage distribution networks, under condition of lack of information about the nodal loads, is presented. Using this method it can obtain the power/energy losses in power transformers and the lines. The test results, obtained for a 20 kV real distribution network from Romania, confirmed the validity of the proposed method. DOI: http://dx.doi.org/10.11591/telkomnika.v11i9.2889 Full Text: PDF

Managing a confederation of rivals

This case highlights sport development issues within a free market environment where natural rivals compete for scarce resources (i.e., athletes). Set in a fictional environment of sport clubs grappling with the development of a network of clubs and coaches to support the growth of youth sport in the area, the case explores the challenges of two independent levels of policy-making – national and grassroots levels – for increased participation and elite development. At the national level, policy strategies and participation proliferation are best served when organizations work together; however, this becomes a challenge when organizations that implement these policies at the grassroots level compete for scarce resources. The resulting natural rivalries must be properly managed to meet larger objectives for growth. The case encourages students to consider the theoretical and practical issues for sport development at the grassroots and national level.

Universal distribution factors for power system open-market studies

AC distribution factors have been used extensively in the recent power and energy pricing studies in free electricity market environment. Because the AC power flow in a given transmission line depends on the complex voltage value at the point of calculation along the line, distribution factors relating line flows to bus injected powers would also depend on such point of calculation. In open-market pricing studies, more flexibility is needed in the derivation and use of power distribution factors in order to allow market entities to base their calculated line flows on a reference (point of calculation) of their market contractual choice. This paper presents a novel model for evaluating universal distribution factors, which are suitable for a wide range of power system analysis and electricity market pricing studies. These universal distribution factors are compact matrix-form expressions with total flexibility in defining the position on the line at which line flows are measured. They are independent of bus power injections and, therefore, can be used for analyzing different pricing scenarios involving different bus power contributions. The paper also demonstrates the practical calculation of the universal distribution factors as well as their sensitivities with respect to the line voltage profile.

Fairness Is an Emergent Self-Organized Property of the Free Market for Labor

The excessive compensation packages of CEOs of U.S. corporations in recent years have brought to the foreground the issue of fairness in economics. The conventional wisdom is that the free market for labor, which determines the pay packages, cares only about efficiency and not fairness. We present an alternative theory that shows that an ideal free market environment also promotes fairness, as an emergent property resulting from the self-organizing market dynamics. Even though an individual employee may care only about his or her salary and no one else’s, the collective actions of all the employees, combined with the profit maximizing actions of all the companies, in a free market environment under budgetary constraints, lead towards a more fair allocation of wages, guided by Adam Smith’s invisible hand of self-organization. By exploring deep connections with statistical thermodynamics, we show that entropy is the appropriate measure of fairness in a free market environment which is maximized at equilibrium to yield the lognormal distribution of salaries as the fairest inequality of pay in an organization under ideal conditions.