Volume 30, 2021 Issue 3 Journal of Economics & Management Strategy

Private labels and product quality under asymmetric information

Zhiqi Chen and Heng XuContrary to the existing theories of private label (PL) products, we demonstrate that the introduction of a PL product by a retailer may improve the profit of the supplier of a competing national-brand (NB) product.

The role of expertise in syndicate formation

Sylvain BourjadeIn most initial public offerings around the world, an underwriter selects syndicate members and uses their information to set the offering price. The objective of this paper is to develop a model of the “book building” process in which the formation of the syndicate is an endogenous decision variable. I show that the underwriter faces a tradeoff between the cost of extracting information and valuation accuracy.

Promotions, managerial project choice, and implementation effort

Frédéric Loss and Antoine RenucciIn our model where career concerns take the form of promotion, managers use projects and effort to influence the labor market beliefs regarding their ability. We show that managers consider how projects affect the extent to which posterior beliefs can differ from initial beliefs, the precision of posterior beliefs, and equilibrium implementation effort costs.

Exclusive dealing when upstream displacement is possible

Ke Liu and Xiaoxuan MengWe study exclusive dealing when the incumbent may be displaced by a more efficient entrant due to the need for a firm to pay a fixed cost to remain active. We show that the incumbent can deter socially efficient entry through exclusive contracts under the one-buyer-one-supplier framework. This result continues to hold in the presence of product differentiation, in which case exclusion is more likely to occur when the efficiency gap between the entrant and the incumbent falls into an intermediate range.

The effects of price information and communication in markets with capacity constraints: An experiment

Katharina MomsenLimited price information and miscoordination reduce buyer surplus in markets with capacity-constrained sellers. In an experiment, I study the effects of facilitating buyer coordination through communication and increasing the availability of price information.

Do exit options increase the value for money of public–private partnerships?

Marco Buso, Cesare Dosi, and Michele MorettoWe study the effects of granting an exit option allowing the private party to terminate a Public–Private Partnerships contract early if it turns out to be loss-making. In a continuous-time setting with hidden information about the private returns on investment, we show that an exit option, acting as a risk-sharing device, can soften agency problems and, in so doing, spur investment and increase the government's expected payoff, even while taking into account the costs that the public sector will have to meet in the future to resume the project.

Too big to succeed? Overstaffing in firms

Hans K. Hvide and Yanren ZhangOverstaffing appears to be a source of significant inefficiencies in organizations, but there is little economic theory that informs us why. We extend the canonical Lazear–Rosen tournament model to a dynamic setting that yields overstaffing at the managerial level.

Organization of R&D outsourcing: Asymmetric cross-effects between locations

María García-Vega and Elena Huergo
When companies acquire R&D from external national providers, would they benefit if they also acquired knowledge from foreign providers? And the other way around? In this paper, we try to answer these questions by empirically examining the cross-effects of international and national R&D outsourcing to generate innovation.

Can information economics explain the organization of productive facilities?

Phillip J. Lederer and Xiaobo Zheng
A management system exists to coordinate, control, and make decisions about activities within an organization. These functions are information intensive, and therefore the design of management hierarchy has much to do with information-processing economics. Most economic entities' management structures are described by “an organization chart” which is a network of departments. The goal of this paper is to take an analytical look at management hierarchy modeled as a tree with information-processing departments at nodes.

Information gathering by overconfident agents

Justin Downs
A principal hires an agent to both gather information about a project's costs and implement it. The agent's information-gathering effort and what he learns are his private information. I allow the agent to be overconfident in the sense that he underestimates his expected cost of implementation and study the effects this overconfidence has on the efficiency of information acquisition and implementation.
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