Regulation and Contract Design: The Impact of Relationship Specific Investment

2016 ◽  
Vol 64 (4) ◽  
pp. 656-682 ◽  
Author(s):  
Kanishka Kacker
Keyword(s):  
Contract Design ◽  
Specific Investment ◽  
The Impact

scholarly journals Incentive Contract Design for the Water-Rail-Road Intermodal Transportation with Travel Time Uncertainty: A Stackelberg Game Approach

Entropy ◽  
2019 ◽  
Vol 21 (2) ◽  
pp. 161
Author(s):  
Wenying Zhang ◽  
Xifu Wang ◽  
Kai Yang
Keyword(s):  
Asymmetric Information ◽  
Travel Time ◽  
Design Problem ◽  
Stackelberg Game ◽  
Contract Design ◽  
Incentive Contracts ◽  
Optimal Time ◽  
Incentive Contract ◽  
Intermodal Transportation ◽  
The Impact

In the management of intermodal transportation, incentive contract design problem has significant impacts on the benefit of a multimodal transport operator (MTO). In this paper, we analyze a typical water-rail-road (WRR) intermodal transportation that is composed of three serial transportation stages: water, rail and road. In particular, the entire transportation process is planned, organized, and funded by an MTO that outsources the transportation task at each stage to independent carriers (subcontracts). Due to the variability of transportation conditions, the travel time of each transportation stage depending on the respective carrier’s effort level is unknown (asymmetric information) and characterized as an uncertain variable via the experts’ estimations. Considering the decentralized decision-making process, we interpret the incentive contract design problem for the WRR intermodal transportation as a Stackelberg game in which the risk-neutral MTO serves as the leader and the risk-averse carriers serve as the followers. Within the framework of uncertainty theory, we formulate an uncertain bi-level programming model for the incentive contract design problem under expectation and entropy decision criteria. Subsequently, we provide the analytical results of the proposed model and analyze the optimal time-based incentive contracts by developing a hybrid solution method which combines a decomposition approach and an iterative algorithm. Finally, we give a simulation example to investigate the impact of asymmetric information on the optimal time-based incentive contracts and to identify the value of information for WRR intermodal transportation.

scholarly journals Heterogeneity of Cash Markets at Physical Delivery Points and the Hedging Effectiveness of Agricultural Commodity Futures in India – Lessons for Contract Optimization.

2020 ◽  
Vol 9 (SI) ◽  
pp. 79-89
Author(s):  
Sanjay Mansabdar ◽  
Hussain C Yaganti
Keyword(s):  
Contract Design ◽  
Commodity Futures ◽  
Futures Contracts ◽  
Agricultural Commodity ◽  
Futures Contract ◽  
Hedging Effectiveness ◽  
Several Variables ◽  
Agricultural Futures ◽  
Delivery Options ◽  
The Impact

Agricultural commodity futures in India are settled by physical delivery and the seller can choose the location of delivery from a list described in the contract specifications. Cash markets at these locations represent the deliverable basket for the futures contract and are the underlying assets for the delivery options granted to the seller by virtue of contract design.  These cash markets are generally heterogenous. This paper studies the impact of heterogeneity of the underlying cash markets in different locations on the hedging effectiveness of the associated futures contract. The hedging effectiveness of cottonseed oilcake and soybean futures is regressed against several variables that represent heterogeneity of the underlying cash markets using ridge regression. We find that in general, the greater the heterogeneity, the poorer the hedging effectiveness of the contract. This paper is unique in that it provides a framework for guidance for contract designers at exchanges and regulators who will find this research useful in optimizing delivery specifications for agricultural futures contracts.  This is especially important given the declining volumes in Indian agricultural commodity futures.

International franchising and performance: a resource-based perspective

2018 ◽  
Vol 46 (8) ◽  
pp. 744-763 ◽  
Author(s):  
Nabil Ghantous ◽  
Shobha S. Das
Keyword(s):  
Relationship Satisfaction ◽  
Structural Equation ◽  
Contract Design ◽  
Equation Modeling ◽  
Strategic Choices ◽  
Comparative Performance ◽  
Content Type ◽  
International Performance ◽  
And Performance ◽  
The Impact

Purpose The purpose of this paper is to investigate international franchise performance. It focuses on how franchisors conceive their international performance, the drivers of their international performance, and how age-at-entry moderates the impact of their resources and capabilities (R&C) on international performance. Design/methodology/approach Using the lens of the resource-based view of the firm, the authors build on franchisor voice from a qualitative study (n=28) to propose a research model of international franchise performance. A second, quantitative study (n=89) tests the model with PLS structural equation modeling. Findings Franchisors view international performance in terms of relationship satisfaction with foreign franchisees and performance in comparison to competitors. The empirical results show that relationship satisfaction significantly improves comparative performance. Both franchisor-owned resources, the brand and knowhow, enhance only comparative performance, while all three international relational capabilities, related to knowhow transfer, monitoring, and contract design, and both reconfigurational capabilities, related to organizational responsiveness and innovativeness, improve relationship satisfaction. Only contract design and innovativeness increase comparative performance. Finally, late internationalization reinforces franchisor ability to leverage relational and reconfigurational capabilities for better relationship satisfaction. Originality/value This paper contributes to research on international franchise performance. It uses a mixed-method design and offers the first quantitative investigation of the drivers of international franchise performance. This research also integrates the role of franchisor R&C with franchisor strategic choices, through the moderating effect of internationalization timing.

ISLAMIC BLENDED FINANCE FOR CIRCULAR ECONOMY IMPACTFUL SMEs TO ACHIEVE SDGs

2020 ◽  
pp. 1-26
Author(s):  
TARIQULLAH KHAN ◽  
FATOU BADJIE
Keyword(s):  
Public Sector ◽  
Private Sector ◽  
Small And Medium Enterprises ◽  
Low Cost ◽  
National Development ◽  
Contract Design ◽  
Islamic Finance ◽  
Incentive Compatible ◽  
Development Goals ◽  
The Impact

In this research, we present a framework for blended Islamic finance for impactful small and medium enterprises (SMEs) to achieve sustainable development goals (SDGs). The blend results from discussing the pertinent perspectives that underlie the motives philanthropy, private sector activities and public sector facilitation. The consensus of these three stakeholders on the impact criteria is an essential precondition for the blend to happen. Therefore, we first developed the consensus-based impact criteria for SMEs, namely, 4Zeros & SS (zero-waste, zero-emissions, zero-interest, zero-foreclosures and service to society). After that, we adopted a financial engineering approach to design products by blending the three motives. Financial contracts could be incentive compatible and effective if these three motivations are recognized and brought together. The purpose of our research is to offer such incentive-compatible structures that can mobilize funding for impactful SMEs, save cost as well as generate revenue for self-sustainability. In the contract design, the private sector provides finance, the philanthropist pays the costs of funds, the public sector facilitates, and the impactful SME gets subsidized financing. Since the blended nature of the contract provides a social subsidy to fund the cost element of the financing, the proposed structure creates a win–win result for the blending parties. While financial institutions expand into the SMEs sector for profitability, blended Islamic finance will attract additional resources towards enhancing development impact. Through the philanthropic component, SMEs, on the other hand, will access the source of social subsidy that will relieve the burden of the exorbitant commercial rates. The funding structure will reduce risk perception and spur growth. Consequently, this collaborative and innovative contract design will contribute to achieving multidimensional human development, as enshrined in the Maqasid al-Shariah, and the SDGs. Impactful businesses must integrate environmental, social and governance best practices as well as national development goals. Hence, the proposal offers several benefits and prospects of extended use for other consensus-based purposes such as low-cost housing, solar panelling, health, education, etc.

Financial factors for improving the competitiveness of the corporate sector in the Komi Republic

2021 ◽  
Vol 2 ◽  
pp. 127-135
Author(s):  
E.N. Timushev ◽  
◽  
Yu.A. Gadzhiev ◽  
M.M. Styrov
Keyword(s):  
Small Businesses ◽  
Resource Curse ◽  
Bank Lending ◽  
Komi Republic ◽  
Corporate Sector ◽  
Regional Competitiveness ◽  
Specific Investment ◽  
Regional Budget ◽  
Investment In Fixed Assets ◽  
The Impact

The paper demonstrates the importance of a stable financial state of the corporate sector for the competitiveness of the region, limited tools of regional budget policy and the possibility of increasing the financial support of small and me-dium-sized businesses in the Komi Republic. The analysis is based on the indicators of investment in fixed assets and the size of bank lending to small and medium-sized businesses, which are both indicators of the finances of the corpo-rate sector of the economy and the macro-financial block in the concept of regional competitiveness. In the Komi Re-public, as in other northern regions of Russia, the volume of bank lending to small businesses is extremely limited – but the specific investment per capita, and with it the growth rate of the economy, significantly lags behind the average northern and average Russian values. Similarly, in the Komi Republic, as in the rest of the resource economies of Rus-sia, the effects of the "resource curse" (low revenue of small and medium-sized businesses and the volume of innovative products) are manifested – while the poverty of the population is high, the size of average monetary incomes is small and, in comparison with regions with similar income levels, informal employment is very limited. The paper suggests a way to overcome the identified negative trends and restore competitiveness – stimulating demand from the corporate sector of the Komi Republic, primarily small and medium-sized businesses, for financial resources offered by federal development institutions. The problems of intersectoral unevenness and the impact of the system of “northern benefits” on the finances of enterprises are considered.

scholarly journals Quality of Outsourced Services, Opportunism and Contract Design

2017 ◽  
Vol 13 (3) ◽  
Author(s):  
Jean Beuve ◽  
Lisa Chever
Keyword(s):  
Panel Data ◽  
Contract Design ◽  
Public Contracts ◽  
The Impact ◽  
Quality Enforcement

AbstractThis paper estimates the impact of contract design on the enforceability of quality in outsourced public contracts. Using panel data from 102 cleaning contracts, our results suggest that quality enforcement depends highly on the

scholarly journals The performance of a blended real estate portfolio for UK DC investors

2015 ◽  
Vol 33 (2) ◽  
pp. 156-168 ◽  
Author(s):  
Alex Moss ◽  
Kieran Farrelly
Keyword(s):  
Real Estate ◽  
Pension Fund ◽  
Content Type ◽  
The Real Estate ◽  
Specific Investment ◽  
Risk Return ◽  
The Uk ◽  
The Impact ◽  
Investment Requirement ◽  
Practical Implications

Purpose – The purpose of this paper is to provide a better understanding of the performance implications for UK DC pension fund investors who choose to combine global listed and UK unlisted real estate in a blended allocation relative to a pure unlisted solution. Design/methodology/approach – Blended listed and unlisted real estate portfolios are constructed. Investor risk and returns are then studied over the full 15 year sample horizon and distinct cyclical phases over this period using a number of risk-return metrics. Performance is then contrasted with that of a pure unlisted solution, as well as UK equity market and bond total returns over the same period. Findings – A UK DC pension fund investor choosing to construct a blended global listed and UK unlisted real estate portfolio would have experienced material return enhancement relative to a pure unlisted solution. The “price” of this enhanced performance and improved liquidity profile is, unsurprisingly, higher portfolio volatility. However, because of the improved returns, the impact upon measured risk adjusted returns is less significant. Practical implications – Relatively liquid blended listed and unlisted real estate portfolios create efficient risk and return outcomes for investors. Originality/value – This study uses actual fund rather than index data (i.e. measures delivered returns to investors), has chosen a global rather than single country listed real estate allocation and is focused on providing clarity around the real estate exposure for a specific investment requirement, the UK DC pension fund market.

Contractual Governance in Trucking: Maislin V. Primary Steel and the Undercharge Crisis

1993 ◽  
Vol 37 (1) ◽  
pp. 56-63 ◽  
Author(s):  
Brian R. Smith
Keyword(s):  
Trucking Industry ◽  
Transactions Cost ◽  
Specific Investment ◽  
Contractual Governance ◽  
The Impact

This paper analyzes the structure of post-deregulation contracting in the trucking industry from a transactions-cost perspective, focusing on the effects of frequent transactions, specific investment, and rate uncertainty. Contrasting the “filed rate doctrine” and “negotiated rates policy,” it examines the “undercharge crisis” and the impact of the Supreme Court's ruling in Maislin v. Primary Steel. The paper concludes that Maislin failed dramatically to eliminate rate uncertainty, but despite the impassioned protests of shippers, the decision reduced only slightly the incentive for them to enter into long-term freight contracts.

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