Free-riding or barganing? : the case of the U.S.-South Korean alliance

This study addresses the question of how the relevant model of the economic theory of alliances accounts for South Korea\u27s defense burden-sharing in the alliance for three decades. To answer this question, this study first, in the broad and theoretical context, attempts to critically explore the two existing models (the free-riding and bargaining models) of the economic theory of alliances, and then to suggest that the relaxed bargaining model may provide a better tool for understanding the defense burden-sharing relationship between allies. In the narrow and empirical context, this study attempts to apply the relaxed bargaining model to the U.S-South Korean alliance to account for South Korea\u27s defense burden-sharing pattern over a period of nearly thirty years (1961-1988). Empirical examinations of four cases are conducted based on the thick concept of win-sets which is the core of two-level games, and on four (five for the last case) sets of contextual factors at both the state and domestic levels such as threat, economic conditions, interests, political and public support, and bureaucratic politics. The major arguments are: (1) South Korea\u27s pattern on defense burden (disproportionately less contribution) during 1961-1968 is characterized as latent bargaining rather than free-riding because South Korea did not commit defection or exploitation which is the key attribute of free-riding; (2) The Nixon Doctrine is characterized as tacit bargaining since it was a process that relied on actions intended (partly) to influence South Korea\u27s policy changes on defense burden but whose goal was not to reach an agreement; (3) The agreement reached in 1979, which set South Korea\u27s defense burden at 6% of the GNP, and the agreement reached in 1988, which requested that South Korea share costs for stationing U.S. forces in South Korea, are characterized as explicit bargaining because they were made through formal and diplomatic negotiation. They were affected by South Korea\u27s critical security interest and improved economic capability, and by U.S. domestic constraints such as the high level of budget deficit, public opposition, and congressional activities; (4) As a whole, the relaxed bargaining model which includes three types of bargaining (latent, tacit, and explicit bargaining) is a better one for understanding South Korea\u27s defense burden-sharing over thirty years. This study also notes that the nature of bargaining has changed as the context has changed. Although this study is not meant to offer an overarching generalization on the defense burden-sharing issue, it has theoretical and empirical implications. The obvious implication of this study is to suggest that the logic of free-riding does not have enough explanatory power for the defense burden-sharing in alliances, nor enough persuasive power to impact on the intra-alliance bargaining processes. Instead, policy-makers or negotiators must understand the nature of bargaining concerning this issue and utilize the thick concept of win-sets which are structured by facilitating factors and constraining factors

Bargaining power, ownership and control of international joint ventures in Taiwan

This thesis provides an empirical analysis of international joint venture activities in Taiwan. The primary purpose is to examine control and its antecedents in terms of ownership, bargaining power, resources contribution, and motivation for forming international joint ventures. Primary data collected by a mail questionnaire is analysed along five core dimensions of international joint venture activities. First, the mechanism, focus, and extent of parent control is identified and tested in a number of sample characteristics. These empirical results also reveal that most joint ventures in Taiwan have higher autonomy and have more autonomy on the appointment of key function managers. Parent firms seek to focus their control over specific activities of the joint ventures rather than attempting to control the entire range of joint venture activities. Second, the results of equity shares held by the host country parents and foreign parents show that both parents have minority shareholding in the joint ventures. A higher ownership by the parents in joint ventures indicates that they have a higher percentage of board members. Third, the relative importance of a set of bargaining power is identified with hypothesis testing of the relationship between control and bargaining power. There is little evidence that the relationship between bargaining power and control is not closely associated. Fourth, the relative importance of resource contribution by parents is identified and hypotheses are tested on the relationship between control and resource contribution factors. The results are strongly supported that the relationships between resource contributions in terms of physical, invisible, financial, human, and organizational ability of parents and their control has significant and positive associations. Fifth, the relative importance of a set of motives for international joint venture formation is identified and hypotheses are tested on the relationship between control and motivation factors in terms of technological acquisition, knowledge learning, risk sharing, competitive strategy consideration, resource complementarily, market expansion. The findings reveal a limited number of significant correlations between motivation factors and control

Online Cooperative Promotion and Cost Sharing Policy under Supply Chain Competition

This paper studies online cooperative promotion and cost sharing decisions in competing supply chains. We consider a model of one B2C e-commerce platform and two supply chains each consisting of a supplier and an online retailer. The problem is studied using a multistage game. Firstly, the e-commerce platform carries out the cooperative promotion and sets the magnitude of markdown (the value of e-coupon). Secondly, each retailer and his supplier determine the fraction of promotional cost sharing when they have different bargaining power. Lastly, the retailers decide whether to participate in the cooperative promotion campaign. We show that the retailers are likely to participate in the promotion if consumers become more price-sensitive. However, it does not imply that the retailers can benefit from the price promotion; the promotion decision game resembles the classical prisoner’s dilemma game. The retailers and suppliers can benefit from the cooperative promotion by designing an appropriate cost sharing contract. For a supply chain, the bargaining power between supplier and retailer, consumer price sensitivity, and competition intensity affect the fraction of the promotional cost sharing. We also find that equilibrium value of e-coupon set by the e-commerce platform is not optimal for all the parties

The evolution of leader-follower reciprocity: The theory of service-for-prestige

Copyright © 2014 Price and Van Vugt. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.This article has been made available through the Brunel Open Access Publishing Fund.We describe the service-for-prestige theory of leadership, which proposes that voluntary leader–follower relations evolved in humans via a process of reciprocal exchange that generated adaptive benefits for both leaders and followers. We propose that although leader–follower relations first emerged in the human lineage to solve problems related to information sharing and social coordination, they ultimately evolved into exchange relationships whereby followers could compensate leaders for services which would otherwise have been prohibitively costly for leaders to provide. In this exchange, leaders incur costs to provide followers with public goods, and in return, followers incur costs to provide leaders with prestige (and associated fitness benefits). Because whole groups of followers tend to gain from leader-provided public goods, and because prestige is costly for followers to produce, the provisioning of prestige to leaders requires solutions to the “free rider” problem of disrespectful followers (who benefit from leader services without sharing the costs of producing prestige). Thus service-for-prestige makes the unique prediction that disrespectful followers of beneficial leaders will be targeted by other followers for punitive sentiment and/or social exclusion. Leader–follower relations should be more reciprocal and mutually beneficial when leaders and followers have more equal social bargaining power. However, as leaders gain more relative power, and their high status becomes less dependent on their willingness to pay the costs of benefitting followers, service-for-prestige predicts that leader–follower relations will become based more on leaders’ ability to dominate and exploit rather than benefit followers. We review evidential support for a set of predictions made by service-for-prestige, and discuss how service-for-prestige relates to social neuroscience research on leadership

Should the EU climate policy framework be reformed?

Though to-date the European Union (EU) has played the most significant leadership role in international negotiations to reduce greenhouse gas (GHG) emissions, the emission-reducing performance of individual EU Member states has for many been less than stellar. Several EU15 Member states continue to raise rather than lower emissions. Analysing the most successful policy instruments, this paper argues EU policy efforts could benefit from three important innovations. The following strategies – the adoption of an EU-wide FIT (feed-in tariff), an EU-wide carbon tax and more flexibility in the trading of carbon credits – could significantly improve emission reductions, their relative cost-efficiency and spread burden-sharing more evenly across technologies and Member states. This raises important questions, both about the effectiveness of EU and Kyoto-style commitments, as well as the EU Emission Trading Scheme (ETS). The commitment strategy, and in particular the EU ETS mechanism, have had the smallest impact on emission reductions. The proposed set of strategies could make a far greater contribution to future EU efforts and potentially lock in the impressive progress already made. Such a policy shift, if successful, would also greatly enhance the EU’s already significant credibility and bargaining power in international climate negotiations.EU climate policy, Climate change mitigation, Renewable Energy, Energy Efficiency, Carbon Taxes

Cooperative Precoding/Resource Allocation Games under Spectral Mask and Total Power Constraints

The use of orthogonal signaling schemes such as time-, frequency-, or code-division multiplexing (T-, F-, CDM) in multi-user systems allows for power-efficient simple receivers. It is shown in this paper that by using orthogonal signaling on frequency selective fading channels, the cooperative Nash bargaining (NB)-based precoding games for multi-user systems, which aim at maximizing the information rates of all users, are simplified to the corresponding cooperative resource allocation games. The latter provides additional practically desired simplifications to transmitter design and significantly reduces the overhead during user cooperation. The complexity of the corresponding precoding/resource allocation games, however, depends on the constraints imposed on the users. If only spectral mask constraints are present, the corresponding cooperative NB problem can be formulated as a convex optimization problem and solved efficiently in a distributed manner using dual decomposition based algorithm. However, the NB problem is non-convex if total power constraints are also imposed on the users. In this case, the complexity associate with finding the NB solution is unacceptably high. Therefore, the multi-user systems are categorized into bandwidth- and power-dominant based on a bottleneck resource, and different manners of cooperation are developed for each type of systems for the case of two-users. Such classification guarantees that the solution obtained in each case is Pareto-optimal and actually can be identical to the optimal solution, while the complexity is significantly reduced. Simulation results demonstrate the efficiency of the proposed cooperative precoding/resource allocation strategies and the reduced complexity of the proposed algorithms.Comment: 33 pages, 8 figures, Submitted to the IEEE Trans. Signal Processing in Oct. 200