Costly Information Acquisition, Social Networks and Asset Prices: Experimental Evidence

We design an experiment to study the implications of information networks for the incentive to acquire costly information, market liquidity, investors' earnings and asset price characteristics in a financial market. Social communication crowds out information production as a result of agent's temptation to free ride on the signals purchased by their neighbors. Although information exchange among traders increases trading volume, improves liquidity and enhances the ability of asset prices to reflect the aggregate amount of information in the market, it fails to improve price accuracy. Net earnings are higher with information sharing due to reduced acquisition of costly signals

Costly Information Acquisition, Social Networks and Asset Prices: Experimental Evidence

We design an experiment to study the implications of information networks for the incentive to acquire costly information, market liquidity, investors' earnings and asset price characteristics in a financial market. Social communication crowds out information production as a result of agent's temptation to free ride on the signals purchased by their neighbors. Although information exchange among traders increases trading volume, improves liquidity and enhances the ability of asset prices to reflect the aggregate amount of information in the market, it fails to improve price accuracy. Net earnings are higher with information sharing due to reduced acquisition of costly signals

Thought and Behavior Contagion in Capital Markets

Prevailing models of capital markets capture a limited form of social influence and information transmission, in which the beliefs and behavior of an investor affects others only through market price, information transmission and processing is simple (without thoughts and feelings), and there is no localization in the influence of an investor on others. In reality, individuals often process verbal arguments obtained in conversation or from media presentations, and observe the behavior of others. We review here evidence concerning how these activities cause beliefs and behaviors to spread, affect financial decisions, and affect market prices; and theoretical models of social influence and its effects on capital markets. Social influence is central to how information and investor sentiment are transmitted, so thought and behavior contagion should be incorporated into the theory of capital markets.capital markets; thought contagion; behavioral contagion; herd behavior; information cascades; social learning; investor psychology; accounting regulation; disclosure policy; behavioral finance; market efficiency; popular models; memes

"Knowledge, technology and economic growth: an OECD perspective"

In this paper we present an international comparison of growth trends with special attention given to developments in labour productivity, allowing for human capital accumulation, and multifactor productivity (MFP), allowing for changes in the composition of fixed capital. In this context an attempt is made, where possible, to identify both the embodied (in particular in ICT equipment) and disembodied components of technical progress. The possible relation between improvements in MFP and the accumulation of knowledge (as proxied by R&D expenditures) is also discussed, and some tentative policy considerations are advanced, mainly with reference to general framework conditions that might have a bearing in fostering technological changes

Implications Of Cross-Border Mergers and Acquisitions By TNCs in Developing Countries: A Beginner's Guide

International mergers and acquisitions have become the preferred mode of overseas investment by multinational companies, accounting for the bulk of FDI in the developed world and for increasing shares in the developing world. However, many governments express concern about this mode of MNC entry, preferring 'greenfield' investments to the takeover of national firms. This paper provides an overview of the main economic costs and benefits that may be involved and argues that M&As do have costs but these may be over-stated.

Using agriculture for development: Supply- and demand-side approaches

For most poor countries of today, using agriculture for development is widely recognized as a promising strategy. Yet, in these countries, investment in agriculture has mostly been lagging relative to international norms and recommendations. Current wisdom on how to use agriculture for development is that it requires asset building for smallholder farmers, productivity growth in staple foods, an agricultural transformation (diversification of farming systems toward high value crops), and a rural transformation (value addition through rural non-farm activities linked to agriculture). This sequence has too often been hampered by extensive market and government failures. We outline a theory of change where the removal of market and government failures to use this Agriculture for Development strategy can be addressed through two contrasted and complementary approaches. One is from the “supply-side” where public and social agents (governments, international and bilateral development agencies, NGOs, donors) intervene to help farmers overcome the major constraints to adoption: liquidity, risk, information, and access to markets. The other is from the “demand-side” where private agents (entrepreneurs, producer organizations) create incentives for smallholder farmers to modernize through contracting and vertical coordination in value chains. We review the extensive literature that has explored ways of using Agriculture for Development through these two approaches. We conclude by noting that the supply-side approach has benefited from extensive research but met with limited success. The demand-side approach has promise, but received insufficient attention and is in need of additional rigorous research which we outline

Knowledge and Information Economy, Welfare and governance: the economic nature of Intellectual Property Rights

В даній статті аналізуються підходи до оцінки економічної природи інтелектуальної власності та її використання з урахуванням економічної категорії благополуччя. Зокрема в статті доведено, що транзакційні витрати використання нематеріальних активів, зокрема прав інтелектуальної вартості значно перевищують витрати пов’язні на їх державне регулювання. Ефективність державного регулювання (ліцензування, обмеження, контроль, власність держави) значно перевищує витрати на переговори між контрагентами по впровадженню інтелектуальних прав власності. В дослідженнях «неокласиків» по просуванню інтелектуальних прав власності враховуються лише витрати на виробництво, проте транзакційні витрати ринкових механізмів не беруться до уваги. В роботі доведено, що підходи неокласичної економічної школи не можуть використовуватися для оцінки таких комплексних товарів як нематеріальні активи. Теоретичні результати дослідження полягають в тому, що приватні переговори та ринкова ефективність використання прав інтелектуальної власності не можуть бути досягнуті без інституціонального втручання, тобто без державного регулювання, необхідного для підтримки умов соціальної справедливості. Проблема забезпечення ефективності функціонування інтелектуальних прав власності полягає не лише в урахуванні виробничих витрат, а навпаки, необхідно брати до уваги транзакційні та колективні витрати. Враховуючи всю комплексність нематеріального капіталу в роботі показано обмеження теорії Коуза та обґрунтовано її відмінності з теорією Вільямсона для нематеріальних активів. Зокрема, що стосується теорії Коуза, доведено необхідність використання інституціонального посередника та регулятора для досягнення соціальної та ринкової ефективності. Ринкові механізми довели свою низьку ефективність при регулюванні та функціонуванні такої категорії благ як нематеріальні активи. В висновках можна стверджувати, що для інтелектуальних прав власності приватні переговори та ринкові механізми просування зазначених категорій товарів не забезпечують бажаний соціальний ефект, основною причиною ринкових провалів можна назвати специфіку та комплексність нематеріальних активів, неповноту та асиметричність інформації. Проведений аналіз може бути використаний в різних сферах пов’язаних з нематеріальними активами: просування товарів екологічної спрямованості, культурні товари, освітні послуги, виробництво інформації, економіка Інтернету. При цитуванні документа, використовуйте посилання http://essuir.sumdu.edu.ua/handle/123456789/9144This paper will study the different conceptions about economic nature of (Intelectual) Property Rights, and the implications in regard to Welfare. This analysis may be applied in various fields concerned with intangible components: ecology, cultural goods, knowledge and information production, internet economics, for example. In regard to the complexity of these types of intangible capital, I will show the limits of the private negotiation inspired in Coase´s approach, and underline the opposition between this approach and the Williamson´s one. При цитировании документа, используйте ссылку http://essuir.sumdu.edu.ua/handle/123456789/914

Overseas Acquisition versus Greenfield Foreign Investment: Which Internationalization Strategy is better for Indian Pharmaceutical Enterprises?

Very recently overseas acquisition and outward greenfield foreign investment have emerged as the two important modes of internationalization of the Indian pharmaceutical enterprises. This study examines the relative strengths and weaknesses of these strategies so as to suggest which between the two is a more effective internationalization strategy for the Indian pharmaceutical firms, given the nature of their ownership advantages. This analysis has been conducted in three stages. First, the nternationalization process of the Indian pharmaceutical industry has been embedded into a four stage theory emphasizing on the emergence of different modes of internationalization like inward foreign investment, imports, exports, outward greenfield investment, overseas acquisition and contract manufacturing including inter-firm strategic alliances. Second, theoretical perspectives have been developed with regard to the different ways in which greenfield investment and overseas acquisition can maximize the revenue productivity of pharmaceutical firms’ competitive advantages and/or to strengthen their competitive position. Third, case study of Ranbaxy Laboratories has been undertaken to empirically assess its experience with overseas acquisitions. The analysis indicates that the growth and internationalization of Indian pharmaceutical enterprises was critically dependent upon strategic government policies pursued in the past. The Indian experience offers a number of policy lessons to other developing countries wanting to build their domestic base in the pharmaceutical sector. Theoretical understandings indicate that acquisition is a more effective internationalization strategy than greenfield investment since the former not only provides all the benefits that the latter gives, but also several other competitive advantages important for firms’ performance in world market. The experience of Ranbaxy shows that overseas acquisitions have augmented its intangible asset bundle including distribution and market networks and have provided access to an existing market.Indian Pharmaceutical Industry; Foreign Investment; M&As; Trade; Strategic Alliances