Products Of Other Firms Research Articles

The exceptional performance of Chinese outward direct investment firms

ABSTRACTThis paper finds that Chinese manufacturing firms that engage in outward foreign direct investment (ODI) have better economic performance than non-ODI manufacturing firms. Overall, ODI firms are more productive and have higher profitability than non-ODI firms. The sector analysis shows that the exceptional performance is significant for labor-intensive industries. Finally, the ODI activity can raise the productivity of other firms in an industry. The larger the ODI within an industry, the higher the productivity of all firms in that industry. The paper suggests that domestic firms set up their firm’s global strategy and reallocate the firm’s resources according to the changing investment environment, taking advantages of profit opportunities outside of domestic markets and invest abroad to get new markets and new technology.

Spatial Externalities and Growth in a Mankiw-Romer-Weil World

This article presents a theoretical growth model that accounts for technological interdependence among regions in a Mankiw-Romer-Weil world. The reasoning behind the theoretical work is that technological ideas cannot be fully appropriated by investors and these ideas may diffuse and increase the productivity of other firms. We link the diffusion of ideas to spatial proximity and allow ideas to flow to nearby regional economies. Through the magic of solving for the reduced form of the theoretical model and the magic of spatial autoregressive processes, the simple dependence on a small number of neighboring regions leads to a reduced form theoretical model and an associated empirical model where changes in a single region can potentially impact all other regions. This implies that conventional regression interpretations of the parameter estimates would be wrong. The proper way to interpret the model has to rely on matrices of partial derivatives of the dependent variable with respect to changes in the Mankiw-Romer-Weil variables, using scalar summary measures for reporting the estimates of the marginal impacts from the model. The summary impact measure estimates indicate that technological interdependence among the European regions works through physical rather than human capital externalities.

Spatial Externalities and Growth in a Mankiw-Romer-Weil World: Theory and Evidence

This paper presents a theoretical growth model that accounts for technological interdependence among regions in a Mankiw-Romer-Weil world. The reasoning behind the theoretical work is that technological ideas cannot be fully appropriated by investors and these ideas may diffuse and increase the productivity of other firms. We link the diffusion of ideas to spatial proximity and allow for ideas to flow to nearby regional economies. Through the magic of solving for the reduced form of the theoretical model and the magic of spatial autoregressive processes, the simple dependence on a small number of neighbouring regions leads to a reduced form theoretical model and an associated empirical model where changes in a single region can potentially impact all other regions. This implies that conventional regression interpretations of the parameter estimates would be wrong. The proper way to interpret the model has to rely on matrices of partial derivatives of the dependent variable with respect to changes in the Mankiw-Romer-Weil variables, using scalar summary measures for reporting the estimates of the marginal impacts from the model. The summary impact measure estimates indicate that technological interdependence among European regions works through physical rather than human capital externalities.

Energy disruptions, interfirm price effects and the aggregate economy

In an economy with many imperfect competitors (monopolistic competition), firms that pass through higher oil prices during a disruption will affect the demand for firms in other industries. Firms that charge higher prices for their final product will include the effect on their own final product in their private decisions but will exclude the effect on the final products of other firms. Although a pecuniary externality, these actions will reduce society's welfare, unlike the case of a perfectly competitive market. This situation creates a societal risk that is much wider than an externality in any single market. Policy interest shifts from one of punishing Persian Gulf oil producers to one of cushioning an industrialized economy from sudden disruptions caused by political and military conflicts. Although the value of reducing oil use depends upon a number of unknown parameters with wide distributions, a representative numerical example suggests that it may approach $5 per barrel.

Local Cadre Accommodation to the "Responsibility System" in Rural China

SINCE DECEMBER 1978, China's leaders have embarked on an ambitious economic development program, which, in rural areas, has seen decollectivization of China's economy and the implementation of a system of farming in which peasants sign contracts with local authorities to produce a certain product at an agreed-upon price (household contract farming).' The new economic policies have had an impact on local rural political organizations, changing both the functions and authority of local officials. Village and sub-village leaders have perceived these changes either as an improvement-in which case they have adapted to them-or as evidence of organizational decline. In the latter case the leaders have accommodated themselves, either by resigning their posts and withdrawing, or by protesting and opposing the new policies and the accompanying organizational decline. In response to these actions, China's higher-level rural leadership has taken remedial action to meet local organizational problems created by the new economic policies. This paper examines cadre accommodation to the new policies, and draws on the work of Albert Hirschman2 to examine local cadre responses to organizational decline. Hirschman argues that in a competitive environment, when firms and organizations decline, rational consumers or organization members will either switch to the products of other firms, thus leaving the organization (exit), or express their dissatisfaction to the management of the firm or leaders of the organization with a view to changing the state of affairs (voice), or use some combination of the two strategies. These

The Degree of Monopoly

If we introduce a measurement of the of it is already clear that we use the word monopoly in the modern (Chamberlinor Robinson-) sense, viz. meaning the absence of pure competition. Only if is taken in this wider sense is there any meaning in the term degree of monopoly. Now, to have a measurement of that of might have different advantages in analytical and practical problems. There are different ways in which the of might be measured, but before going into a discussion of their relative merits I want to introduce an index of power which is based on one of the diagrammatic devices used by Chamberlin in his Theory of Monopolistic Competition. The diagram I am going to use is introduced by Professor Chamberlin as an alternative demonstration of the equilibrium of the firm under conditions of product differentiation.' Here I reproduce only that part of the diagram which is relevant for my argument. In Fig. i, CC' is the familiar cost curve of a single firm. We assume now that the product2 of this firm is in some way differentiated from the products of other firms producing the same commodity. We then can draw two different demand curves for the firm's product, dd' and DD', each based on different assumptions. Assuming that at present the firm charges the price OP and sells the amount OM, dd' shows the various prices which could be obtained for different outputs, provided the competing firms do not change their price. DD' on the other hand shows which prices would be combined with various levels of output, if the other firms change their price (or output) in the same or some other predetermined way as the firm in question. Chamberlin makes the simplifying assumption that all firms charge the same price, OP, and that DD' represents the price-output relation