Endogenous Timing and Quality Standards in a Vertically Differentiated Duopoly

The consequences of the adoption of quality standards on the endogenous timing of moves are investigated in a vertically differentiated duopoly. We obtain two main results. First, we prove that, when the low-quality firm is Stackelberg leader in the quality stage, the related MQS is ineffective. Second, the timing game in the quality space has a unique equilibrium in pure strategies, involving simultaneous moves. The related optimal MQS is time consistent, although suboptimal from the viewpoint of the regulator.Minimum Quality Standard, extended game, endogenous timing

Corporate Governance, Corporate and Employment Law, and the Costs of Expropriation

We set up a model to study how ownership structure, corporate law and employment law interact to set the incentives that infl uence the decision by the large shareholder or manager effectively controlling the fi rm to divert resources from minority shareholders and employees. We suggest that agency problems between the controller and other investors and holdup problems between shareholders and employees are connected if the controller bears private costs of “expropriating” these groups. Corporate law and employment law may therefore somethimes be substitutes; employees may benefi t from better corporate law intended to protect minority shareholder, and vice versa. Our model has implications for the domestic and comparative study of corporate governance structure and addresses, among other things, the question whether large shareholders are better able to “bond” with employees than dispersed ones, or whether the separation of ownership facilitates longterm relationships with labor

Market Coverage and the Existence of Equilibrium in a Vertically Differentiated Duopoly

The existence of a pure-strategy subgame perfect equilibrium in qualities and prices is investigated in a duopoly model of vertical differentiation where quality improvements require a quadratic variable cost. The alternative cases of partial and full market coverage are considered. It is shown that there exists a parameter range where the incentive to decrease differentiation arises for the high-quality firm, preventing firms to reach a pure-strategy duopoly equilibrium

Minimum Quality Standards and Collusion

We model the introduction of a minimum quality standard in a vertically differentiated duopoly. We extend the literature in determining the standard endogenously, showing that the maximisation of social welfare entails an increase in the surplus accruing to consumers served by the low quality firm and a decrease in the surplus of the remaining consumers. Then, we consider the effects of the standard on the stability of price collusion, proving that the standard makes it more difficult for firms to collude if consumers are sufficiently rich

Full vs Partial Market Coverage with Minimum Quality Standards

The consequences of the adoption of quality standards on the extent of market coverage is investigated by modelling a game between regulator and low-quality firm in a vertically differentiated duopoly. The game has a unique equilibrium in the most part of the parameter range. There exists a non-negligible range where the game has no equilibrium in pure strategies. This result questions the feasibility of MQS regulation when firms endogenously determine market coverage

Capitale sociale e accountability: il ruolo del bilancio di missione nella governance delle organizzazioni non profit

In questo saggio si espongono alcune ragioni giustificative dell'adozione, da parte di organizzazioni non profit (d'ora in poi, ONP), di uno strumento di rendicontazione sociale come il bilancio di missione. La tesi di fondo che intendiamo sviluppare e' sintetizzabile nei termini seguenti: e' quanto mai auspicabile che, per un soggetto mission-oriented quale e' un ente non lucrativo, il bilancio di missione si configuri, prima ancora che come uno strumento di comunicazione in senso stretto, come una efficace leva di governance organizzativa, funzionale al monitoraggio e al rafforzamento nel tempo delle relazioni tra l'ONP e i propri stakeholder di riferimento, sia interni che esterni. Se concepito in questo modo, tale strumento di accountability sociale e' in grado di produrre effetti benefici potenzialmente molto rilevanti per l'organizzazione in termini di tutela e valorizzazione del suo profilo identitario nel tempo, fornendo un contributo specifico alla prevenzione di pericolose e tutt'altro che improbabili derive isomorfiche(paragrafo 1). In particolare, sosteniamo che l'obiettivo di preservare e consolidare la propria identita' organizzativa potra' essere perseguito in maniera tanto piu' efficace quanto piu' l'ONP riuscira' (i) a dotarsi stabilmente di un assetto di governance di tipo multistakeholder (paragrafo 2); chiariremo inoltre che, per evitare che la compresenza di una molteplicita' di interessi degeneri assumendo caratteri conflittuali, e' essenziale che (ii) i diversi stakeholder mantengano un elevato livello di identificazione nella mission istituzionale; cio' presuppone che l'ONP sia in grado di procedere all'accumulazione di uno stock significativo di "capitale sociale che apre" (bridging social capital; paragrafo 3). All'interno di questo quadro concettuale, che assegna alla rendicontazione sociale un ruolo di primaria importanza in chiave gestionale, il bilancio di missione e' chiamato ad assolvere ad una essenziale funzione complementare a quella del vincolo formale alla non distribuzione degli utili, consentendo all'ONP di non disperdere uno dei principali fattori di vantaggio comparato di tale forma organizzativa- la presenza di forti motivazioni intrinseche nei propri stakeholder chiave (paragrafo 4)- e quindi di agire coerentemente con i propri fini istituzionali.Capitale sociale; accountability; bilancio sociale; governance; organizzazioni non profit; governance multistakeholder; bridging social capital; beni relazionali; social accountability;

Minimum Quality Standards in Hedonic Markets with Environmental Externalities

We investigate the introduction of a minimum quality standard (MQS) in a vertically differentiated duopoly with an environmental externality. We establish that the MQS bites only if the hedonic component of consumer preferences is sufficiently strong. Then, we illustrate an underlying tradeoff between the beneficial effects of quality enhancement on prices and the associated undesirable increase in the environmental externality

Corporate Governance, Corporate and Employment Law, and the Costs of Expropriation

It is one of the well-known cornerstones of corporate governance that (minority) share-holders are subject to a risk of being expropriated by the controller of the firm, i.e. either entrenched management under a dispersed ownership structure or a controlling share-holder under concentrated ownership. On the other hand, economic theory has increasingly begun to recognize the role of employees and other "nonshareholder constituencies" during the past years. While potential shareholders may be reluctant to invest if they are adequately protected against private benefits of control, stakeholders may be deterred from investing if they are subject to the risk of ex post opportunism (e.g. holdup). Although both aspects may be important to corporate governance, their interaction has not yet been thoroughly investigated. In our model we study the incentives that influence the decision by the controller of the firm (either a controlling shareholder or manager) to divert resources from (other) shareholders and employees. We also analyze how these incentives vary, between firms, according to the specific corporate governance structure chosen by a certain firm and the degree of protection granted by the law. The effectiveness of diversion (i.e. the amount taken from the prior expectation of dividends or wages and additional implicit benefits) depends on the effectiveness of corporate law and employment law respectively against the taking of private benefits of control (to the detriment of shareholders) or the exploitation of (e.g.) holdup situations (to the detriment of workers). Naturally, the incentive of the controller to expropriate labor depends on his share in the firm, since shareholders (as a group) are the beneficiaries of holding up labor. Ex post, minority shareholders will therefore want the controller to exploit labor. Because of his increased financial incentive, a controlling shareholder will ceteris paribus have a larger financial incentive to hold up employees than a mere manager with a negligible share in the firm. By contrast, a strand in the corporate governance literature presupposes that large shareholders are better able to "bond" with labor than dispersed ones, while other authors emphasize that dispersed ownership helps managers to form long-term relationships with the firmýs stakeholders, and that large shareholders may be in a better position to exploit them. We elucidate the circumstances under which each of these two assumptions is correct. Furthermore, our model shows that employees will not only benefit from labor law, but also from corporate law protecting minority shareholder against expropriation, since it will reduce the financial incentive of a controlling shareholder to exploit employees. It also highlights how corporate law and labor law are interdependent in their effects on expropriation of both groups. Moreover, this interdependence has different effects depending on the corporate governance structure chosen by the company. The more careful analysis of our paper suggest that the crucial factor is not concentrated ownership as such (to the contrary), but other factors that can be identified as private cost of expropriation borne by the controller (be it a controlling shareholder or manager). For example, the literature on family firms suggest that controlling families may have a "taste" for a certain social position in the community and therefore be reluctant to take an overly tough stance vis-ý-vis employees. Similarly, a controlling manager may have a taste for empire building and therefore be reluctant to initiate redundancies and plant closures. Similar reasons for private costs of expropriation can be brought with regard to shareholders. The cost of expropriation therefore creates a commitment against expropriation that may encourage workers to make specific in-vestment and investors to buy shares. However, in some cases the private cost of expropriation that we identify as an important factor for the protection of shareholders and employees might be substantially reduced (or even negative). For example, the decreased probability of a hostile takeover in a corporate governance system with dispersed ownership and an effective market for corporate control could be seen as a negative private cost of expropriation that makes ex post opportunistic situations more likely. By varying the degree of ownership concentration and the amount and sign of the controllerýs private cost of expropriation, our model is able to explain the interaction of corporate and employment law in corporate governance systems and firm-level structures, such as Berle-Means firms (both with entrenched managers and an effective market of corporate control), publicly traded and privately held family firms, firms controlled by financial investors (including hedge funds), and professional partnerships such as law firms

Social Investment and youth labour market participation: a EU regional analysis

In this paper, we first rely on small area techniques to derive from EU-SILC survey new indicators of compensatory and investment policies at regional level. While compensatory policies have mainly the goal of protecting individuals from \u201cold\u201d risks (e.g. old-age), investment-related social policies tend to focus more on \u201cnew social risks\u201d (i.e. skill deficits). We rely on these new indicators to perform a data-driven SVAR analysis to investigate the casual relationships between youth labour market outcomes and these two types of spending. Our results support the view that investment policies are more effective for tackling new social challenges