Economics and Finance

The first section of the book is concerned with how economics is, and should be used, in business. It stresses that the value of economics lies in being able to provide us with a better understanding of social and commercial issues, rather than help us forecast economic trends. Similarly, it provides a direction for the development of management science as a means of understanding the behaviour of firms.

The second section of the book examines the application of economics to the central strategic issues facing firms – their choice of activities and markets. It provides an exposition of the resource‐based theory of strategy, which examines the dynamics of the successes and failures of firms by reference to their distinctive capabilities.

The next section develops some broader themes that are suggested by the resource‐base view of strategy that recognizes the importance of corporate personality. This perception implies that large companies are fundamentally social institutions and the economic and social consequences of this result are examined.

The final section is a collection of shorter essays, which are designed to illustrate how business economics can be used to analyse a range of individual commercial issues such as pricing positioning and the evolution of industry structure.

This book is based on detailed historical research in the USA and Germany, and represents a challenge to current orthodoxy on corporate governance. It is a challenging and informed examination of the links between the general business environment and the operations, decisions, and organizations of firms. The author also explores the links between corporate governance and innovation. The eight chapters are: Innovation, resource allocation, and governance; Transforming the debates on corporate governance; The foundations of managerial control in the USA; The post‐war evolution of managerial control in the United States; Challenges to post‐war managerial control in the USA; US corporate responses to new challenges; From managerial to contested control in Germany; and The emerging challenges to organizational control in Germany.

Among the questions tackled by Simon Domberger in this book are the following: When should organizations contract out services traditionally produced in‐house? Is outsourcing another ephemeral management fad, or is it an efficient and effective means of delivering services and of adding value? What are the characteristics of strategically sound contracting decisions? And how can organizations prosper from the outsourcing revolution? The book is based on over a decade of research and consulting experience, and its conclusions have many practical implications. It develops an analytical decision‐making framework for the assessment of contracting options, and has relevance in both the private and public sectors. It contains many illustrations and over 30 international case studies; over 50 companies and public sector organizations are discussed, including Microsoft, BP, Marks & Spencer and Samsung. The book is divided into four parts. Part I begins by considering the ‘make or buy’ decision, and this is followed by a discussion of the shifting boundaries of organizations, which revisits some of the critical issues underlying the theory of the firm. Part II examines in detail the benefits and costs of contracting. Part III examines the strategic aspects of contracting, involving the implementation of actual policies. Part IV looks at structural change associated with contracting, at the level of both individual sectors and the whole economy. Each chapter has a guide to further reading at its end.

Anjan Mukherji, arguably one of India's most distinguished economists, is known for his research on the stability of the Walrasian tatonnement, its relation to the weak axiom of revealed preference, the effect of choice of the numeraire and its relation to the Edgeworth-Uzawa barter process. Two of his recent papers, ‘Global Stability Conditions on the Plane: A General Law of Demand’ (2007) and ‘The Stability of a Competitive Economy: A Reconsideration’ (2008), have yielded especially interesting results. This book explores various aspects of economic theory and quantitative techniques as well as their applications and relevance to policymaking. Chapters deal with a wide range of topics such as Markovian equilibria in a dynamic general equilibrium model with heterogeneous consumers, monotone Markov models, multiple equilibria in a dynamic two-country model, observability of chaotic economic dynamics in the Matsuyama model, a simple exposition of learning by doing in endogenous growth theory, economic growth and the quality of teachers in a public education system, wealth effects, investment-led growth cycles, distraction and incentives, liquidity preference and information, coordination in teams, decomposition of accident loss and efficiency of negligence rule, international cartels and spheres of influence, price competition in a mixed duopoly, recommended play versus costly punishments in a laboratory public goods game, and India's monetary policy accommodation during the global crisis. It also examines private investment in human capital and industrial development, focusing on the Indian software industry, and arranged marriage, co-residence and female schooling in India.

Business strategy is becoming increasingly ’pluralist’, drawing on the insights of different disciplines and business practice in different parts of the world. This book brings together, under three main headings, the work and ideas of leading international scholars working in the field: Part I, Technology in the firm (4 chapters); Strategy/organization (6 chapters); and Part III, Regions (8 chapters). The purpose of the book is to explore, from different perspectives, the dynamic interplay between the technology of a firm, its strategies, organizational choices, and issues of place, region, and location. The volume is an edited version of the revised papers that were originally presented at the Third Prince Bertil Symposium on the Dynamic Firm, in Stockholm, in June 1994.

This book contains articles by leading economists in which they forecast the way in which economics will evolve in the new millennium. The three sections of the book concern the microfoundations of macroeconomics, markets and organization, and issues in econometrics. Each of these themes reflect a major interest of the GREQAM research group in Marseille. The book was published to celebrate the 10th birthday of the group.

Cluster policies have become very popular among policy makers over the last thirty years. However, the mechanisms at work behind cluster dynamics, the gains that can be expected from more clustering, and the determinants of cluster policies that are implemented are not so clear. This book addresses these issues theoretically and empirically on the French case. Studying France is interesting because there is a long tradition of strong government intervention regarding the location of economic activity and because French cluster initiatives are more or less unified across the country. From a theoretical point of view, spatial agglomeration brings gains until a certain point from which congestion effects can offset these gains, and under certain conditions, it is likely that firms tend to cluster too much. This raises questions about cluster policies that would aim at always increasing concentration. Moreover, cluster policies are very demanding in terms of information and are subject to many political economy issues. The empirical analysis on French firm‐level data confirms that, in the short run, firms reap gains from agglomeration until a given level of agglomeration from which congestion effects become more important. Given these agglomeration economies, the current geography in France does not seem vastly suboptimal. On the other hand, the analysis of the first cluster policy implemented in this country shows that traditional equity determinants of regional policies, instead of competitiveness considerations, were still in play. In that sense, while acknowledging the positive impact of spatial agglomeration on firm‐level performance, this book tends to tone down the worldwide enthusiasm for cluster policies.

However much people want esteem, it is an untradeable commodity: there is no way that I can buy the good opinion of another or sell to others my good opinion of them. But though it is a non-tradable good, esteem is allocated in society according to systematic determinants; people’s performance, publicity and presentation relative to others will help fix how much esteem they enjoy and how much disesteem they avoid. The fact that it is subject to such determinants means in turn that rational individuals are bound to compete with one another, however tacitly, in the attempt to control those influences, increasing their chances of winning esteem and avoiding disesteem. And the fact that they all compete for esteem in this way shapes the environment in which they each pursue the good, setting relevant comparators and benchmarks, and determining the cost that a person must bear–the price that they must pay–for obtaining a given level of esteem in any domain of activity.

Hidden in the multifarious interactions and exchanges of social life, then, there is a quiet force at work–a force as silent and powerful as gravity–which moulds the basic form of people’s relationships and associations. This force was more or less routinely invoked in the writings of classical theorists like Aristotle and Plato, Locke and Montesquieu, Mandeville and Hume and Madison. Sometimes it was invoked to explain why people behaved as they did, sometimes to identify initiatives whereby they might be persuaded to behave better. Although Adam Smith himself gave it great credence, however, the rise of economics proper coincided with a sudden decline in the attention devoted to the economy of esteem. What had been a topic of compelling interest for earlier authors fell into relative neglect throughout the nineteenth and twentieth centuries. This book is designed to reverse the trend. It begins by outlining the psychology of esteem and the way the working of that psychology can give rise to an economy. It then shows how a variety of social patterns that are otherwise anomalous come to make a lot of sense within an economics of esteem. And it looks, finally, at the ways in which the economy of esteem may be reshaped so as to make for an improvement–by reference to received criteria–in overall social outcomes. While making connections with older patterns of social theorizing, it offers a novel orientation for contemporary thought about how society works and how it may be made to work. It puts the economy of esteem firmly on the agenda of economic and social science and of moral and political theory.

Sheds some light on how markets develop. In particular, it suggests that the ‘new economy’ is not much different from the ‘old economy’ and that in general, the early evolution of markets can significantly shape their later structure. The main arguments are elaborated in four chapters, each of them extensively illustrated with product‐case studies (internet, automobiles, television, or mobile phones, etc.). Ch. 2 explores the drivers of innovation and concludes that new technologies are basically pushed on to the market from the supply side. Ch. 3 looks at the dynamics of entry in a new market. Ch. 4 deals with the emergence of a dominant design as a consensus good. Ch. 5 shows how the dominant design shapes the nature of the competition in the new mass market and describes the logistical growth pattern characteristic of most new markets. The last chapter is devoted to sketch out the basic features of market evolution that follow from the events in the early stages of development.

The book covers the modern developments in Evolutionary Game Theory, with an emphasis on economic contexts and applications. It begins with the basic ideas as they originated within the field of theoretical biology, focusing on the core notions of Evolutionarily Stable Strategy and Replicator Dynamics. Both the static and dynamic approaches of this biological literature are presented in detail, and the general analysis illustrated with numerous examples. It then proceeds to the formulation of a theoretical framework that is suitable for the study of social and economic phenomena from an evolutionary perspective. After a discussion of strictly deterministic dynamic models, stochastic perturbations are introduced in order to account for the social‐ and individual‐based sources of ‘noise’ (including aggregate shocks, agents’ experimentation, and population renewal), which play an important role in evolutionary processes.

Evolutionary Theory has become one of the leading approaches to understanding bounded rationality, learning, and change in complex social environments. The recent boom experienced by this discipline makes this book's systematic presentation of its fundamental contributions essential reading for any newcomer to the field. In addition, new avenues of research are suggested, and plentiful examples illustrate the theory's potential applications.