Issue 4

Volume 27 JOURNAL OF ECONOMICS & MANAGEMENT STRATEGY
Winter 2018

Store brands and retail grocery competition

Rong Luo
In this paper, I quantify the different impacts of retailer competition on national brands and store brands using the scanner data of a U.S. chain retailer. By analyzing two counterfactual cases, I find that 1) if the retailer did not sell store brands, its profit would decrease, and the loss would be greater in markets with more competitors; and 2) if the retailer competition had increased, then the national brands' retail prices would decrease more than the store brands' prices.

Selling through referrals

Daniele Condorelli, Andrea Galeotti, and Vasiliki Skreta
We endogenize intermediaries' choice to operate as agents or merchants in a market where there are frictions due to asymmetric information about consumption values.

Platform pricing and consumer foresight: The case of airports

Ricardo Flores‐Fillol, Alberto Iozzi, and Tommaso Valletti
We analyze the optimal behavior of a platform providing essential inputs to downstream firms selling a primary and a second complementary good. Final demand is affected by consumer foresight, that is, consumers may not anticipate the ex post surplus from the secondary good when purchasing the primary good.

On the determinants and consequences of informal contracting

Ricard Gil and Giorgio Zanarone
As documented by Macauley and others, informal contracts are pervasive in modern economies. Yet, systematic empirical evidence on them is still limited. In this paper, we provide a framework to investigate the determinants and consequences of informal contracting.

Managerial turnover and entrenchment

Zenan Wu and Xi Weng
We consider a two‐period model in which the success of the firm depends on the effort of a first‐period manager (the incumbent) as well as the effort and ability of a second‐period manager. Our model predicts that it is optimal for the board to design a contract to induce entrenchment (respectively, anti‐entrenchment) if the signal regarding the incumbent manager's ability becomes sufficiently uninformative (respectively, informative).

Contract contingency in vertically related markets

Emanuele Bacchiega, Olivier Bonroy, and Emmanuel Petrakis
We study the optimal precontractual arrangement offers of an upstream monopolist producing an essential input that may sell to two vertically differentiated downstream firms. A powerful supplier always opts for an exclusive contract. By contrast, a weaker supplier offers nonexclusive contracts and makes each of them contingent or noncontingent such as to guarantee the most favorable outside option in its negotiations.

On the role of outside options in wage renegotiation

Fengjiao Chen, Chiu Yu Ko, and Duozhe Li
We study a game‐theoretic model of wage renegotiation. A worker, after receiving a superior outside offer, initiates a wage renegotiation with his current employer. During the renegotiation, whenever a proposal is rejected, the worker decides whether to opt out. When the two parties are sufficiently patient, any wage level between the outside offer and the entire net surplus can be sustained in equilibrium. Opting out may also arise in equilibrium.

Corporate social responsibility and product quality

Aleix Calveras and Juan‐José Ganuza
We study both theoretically and empirically the relationship between different types of corporate social responsibility (CSR) and a firm's product quality. We show that CSR may serve as a tool for a firm's product differentiation strategy, finding that both internal and external CSR enhance a firm's product quality.

Economic influence activities

Davin Raiha
Firms frequently make operational and strategy decisions to gain political influence. They locate plants, expand workforces, or choose suppliers, with the aim of affecting the economy and the electoral success of politicians. This behavior constitutes a nontraditional form of influence, which I refer to as economic influence activities (EIA). In this paper, I show how such activities influence policymaking and why firms may prefer it to more traditional influence activities such as campaign contributions.