scholarly journals Selection Effects with Heterogeneous Firms

2018 ◽  
Vol 17 (4) ◽  
pp. 1294-1334 ◽  
Author(s):  
Monika Mrázová ◽  
J Peter Neary
Keyword(s):  
Market Access ◽  
Heterogeneous Firms ◽  
Entry Mode ◽  
Threshold Effects ◽  
Order Selection ◽  
Selection Effects ◽  
Fixed Costs ◽  
Canonical Models ◽  
First Order ◽  
Vertical Fdi

Abstract We characterize how firms select between alternative ways of serving a market. “First-order” selection effects, whether firms enter or not, are extremely robust. “Second-order” ones, how firms serve a market conditional on entry, are much less so: more efficient firms select the entry mode with lower market-access costs if firms’ maximum profits are supermodular in production and market-access costs, but not necessarily otherwise. We derive microfoundations for supermodularity in a range of canonical models. Notable exceptions include horizontal and vertical FDI with “subconvex” demands (i.e., less convex than CES), fixed costs that increase with productivity, and R&D with threshold effects.

Technology Diffusion Determines Productivity Distribution and Aggregate Growth

2017 ◽  
Vol 8 (2) ◽  
pp. 54-71
Author(s):  
Manoj Kumar
Keyword(s):  
Income Distribution ◽  
Research And Development ◽  
Technology Diffusion ◽  
Heterogeneous Firms ◽  
Government Revenue ◽  
Fixed Costs ◽  
Productivity Distribution ◽  
Aggregate Growth ◽  
The Government ◽  
The Cost

This paper studies how technology diffusion interacts to endogenously determine the productivity distribution and generate aggregate growth. This paper models firms that choose to adopt technology, or produce with their existing technology. In the context of technology diffusion, one therefore has to consider whether redistributive revenues of the government may, in fact, be allocated towards reducing the fixed costs associated with productive technologies. This paper presents a model in which the cost of technology diffusion is endogenous and varies across heterogeneous firms. The results indicate that the technology with low productivity is used by the majority of individuals in the early stages of development. At this stage, a relatively higher level of inequality characterizes the income distribution. As capital deepening and redistribution of income and wealth takes place, the inequality among individuals tends to decrease. Once this happens individuals prefer a relatively larger proportion of government revenue to be allocated towards cost-reducing Research and Development (R&D) expenditures. Eventually all individuals make the switch to the better technology and consequently their incomes converge.

scholarly journals Higher-fitness yeast genotypes are less robust to deleterious mutations

Science ◽  
2019 ◽  
Vol 366 (6464) ◽  
pp. 490-493 ◽  
Author(s):  
Milo S. Johnson ◽  
Alena Martsul ◽  
Sergey Kryazhimskiy ◽  
Michael M. Desai
Keyword(s):  
Second Order ◽  
Order Selection ◽  
Deleterious Mutations ◽  
Mutational Robustness ◽  
First Order ◽  
Fitness Effects ◽  
Yeast Strains ◽  
Selection For ◽  
Microbial Systems ◽  
Insertion Mutations

Natural selection drives populations toward higher fitness, but second-order selection for adaptability and mutational robustness can also influence evolution. In many microbial systems, diminishing-returns epistasis contributes to a tendency for more-fit genotypes to be less adaptable, but no analogous patterns for robustness are known. To understand how robustness varies across genotypes, we measure the fitness effects of hundreds of individual insertion mutations in a panel of yeast strains. We find that more-fit strains are less robust: They have distributions of fitness effects with lower mean and higher variance. These differences arise because many mutations have more strongly deleterious effects in faster-growing strains. This negative correlation between fitness and robustness implies that second-order selection for robustness will tend to conflict with first-order selection for fitness.

scholarly journals Higher fitness yeast genotypes are less robust to deleterious mutations

2019 ◽  
Author(s):  
Milo S. Johnson ◽  
Alena Martsul ◽  
Sergey Kryazhimskiy ◽  
Michael M. Desai
Keyword(s):  
Second Order ◽  
Order Selection ◽  
Deleterious Mutations ◽  
Mutational Robustness ◽  
First Order ◽  
Fitness Effects ◽  
Yeast Strains ◽  
Selection For ◽  
Microbial Systems ◽  
Insertion Mutations

AbstractNatural selection drives populations towards higher fitness, but second-order selection for adaptability and mutational robustness can also influence the dynamics of adaptation. In many microbial systems, diminishing returns epistasis contributes to a tendency for more-fit genotypes to be less adaptable, but no analogous patterns for robustness are known. To understand how robustness varies across genotypes, we measure the fitness effects of hundreds of individual insertion mutations in a panel of yeast strains. We find that more-fit strains are less robust: they have distributions of fitness effects (DFEs) with lower mean and higher variance. These shifts in the DFE arise because many mutations have more strongly deleterious effects in faster-growing strains. This negative correlation between fitness and robustness implies that second-order selection for robustness will tend to conflict with first-order selection for fitness.

The effect of comparative advantage of host country’s industry on multinationals’ M&A vs greenfield FDI decisions

2016 ◽  
Vol 20 (3) ◽  
pp. 229-258 ◽  
Author(s):  
Jaeho Lee ◽  
Yong Joon Jang
Keyword(s):  
Comparative Advantage ◽  
Investment Decision ◽  
Heterogeneous Firms ◽  
Entry Mode ◽  
Foreign Market ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Trade Model ◽  
Comparative Advantages

Purpose The purpose of this paper is to argue that comparative advantage of host country’s industry can be one of the significant determinants of the decision on mergers and acquisitions (M&A) or greenfield in foreign direct investment (FDI). Design/methodology/approach The authors extract five-related properties of an industry with comparative advantage in a host nation from Bernard et al.’s (2007) international trade model with heterogeneous firms and attempt to empirically test their roles in a multinational enterprise’s (MNE) M&A or greenfield investment decision, using the inward FDI data set in Korea from 1999 to 2006. Findings The theoretical framework finds that the five properties derived from an industry with comparative advantage in a host country have mixed motives for M&A or greenfield. The empirical results show that selected conventional independent variables generally affect the M&A or greenfield entry mode decision with significance individually and that their impacts become more or less prominent when the authors employ interaction terms combining them with comparative advantages in the industries. Research limitations/implications This implies that MNEs not only consider their own firm-specific advantages or other country-level factors for foreign market entries as the previous research generally found, but also seriously take into account industry-specific factors, especially industry-wide comparative advantages based on heterogeneous productivities of firms. Originality/value This paper reconciles multinationals’ strategic motives under an oligopolistic market with their efficiency gains under a monopolistic competitive market, which are considered as two main factors for cross-border M&A. Furthermore, this paper adds a new firm-level data set into entry mode research.

THE NEW KEYNESIAN WAGE PHILLIPS CURVE: CALVO VS. ROTEMBERG

2018 ◽  
Vol 24 (5) ◽  
pp. 1017-1041 ◽  
Author(s):  
Benjamin Born ◽  
Johannes Pfeifer
Keyword(s):  
Phillips Curve ◽  
New Keynesian ◽  
Adjustment Cost ◽  
Dsge Models ◽  
Fixed Costs ◽  
Wage Setting ◽  
First Order ◽  
Wide Range ◽  
Order Of Magnitude ◽  
Welfare Implications

We systematically evaluate how to translate a Calvo wage duration into an implied Rotemberg wage adjustment cost parameter in medium-scale New Keynesian DSGE models by making use of the well-known equivalence of the two setups at first order. We consider a wide range of felicity functions and show that the assumed household insurance scheme and the presence of labor taxation greatly matter for this mapping, giving rise to differences of up to one order of magnitude. Our results account for the inclusion of wage indexing, habit formation in consumption, and the presence of fixed costs in production. We also investigate the conditional and unconditional welfare implications of the wage-setting schemes under efficient and distorted steady states.

Collective action in community management of grazing lands: the case of the highlands of northern Ethiopia

2006 ◽  
Vol 11 (1) ◽  
pp. 127-149 ◽  
Author(s):  
SAMUEL BENIN ◽  
JOHN PENDER
Keyword(s):  
Collective Action ◽  
Market Access ◽  
Community Management ◽  
Northern Ethiopia ◽  
Fixed Costs ◽  
Grazing Land ◽  
Cultural Heterogeneity ◽  
Community Grazing ◽  
Grazing Lands ◽  
The Impact

Collective action can play a significant role in sustainable management of common grazing lands through restricting access and regulating use. However, it is not clear why there are often violations of grazing restrictions in equilibrium. This paper first presents a theoretical framework of collective action in community management of grazing lands that explicitly models individual violations behaviour. Then data from the highlands of Amhara region of Ethiopia are used to test the model predictions to examine the impact of policy-relevant factors on collective establishment of grazing restrictions and violations of grazing restrictions. Econometric results show that collective action in community grazing land management is likely to be more beneficial and effective in communities with better market access or higher populations. Collective action, on the other hand, is less likely to be successful in communities with greater social, economic, or cultural heterogeneity or more affluent members. Factors related to greater livestock profitability, such as rainfall, or fixed costs of negotiating agreements, such as total land area of the community, have ambiguous effects, as they are associated with establishment of grazing restrictions as well as violating the restrictions.

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