Green Lemons - Environmental Labels and Entry into an Environmentally Differentiated Market under Asymmetric Information

The paper inquires whether a public eco-label mitigatesadverse selection, where an ecologically superior (green) product variant is underprovided. A model, integrating entry into a perfectly competitive, vertically differentiated industry and rationally expected quality structure (REQS) under asymmetric information, provides conditions for the label, serving as screening device, to increase green supply and curb pooling. Perverse reactions entail decreasing green supply, enhanced pooling, or increasing non-green supply. It is shown that the common single crossing property disregards the impact of changes in REQS on absolute profitability and may misdiagnose firms' incentives to attain the label. if labelling causes market expansion, pollution may increase even if substitution towards the green variant occurs. However, this only happens if both variants are environmentally sensitive in a well-defined sense.asymmetric information, eco-labelling, entry, market structure, screening, vertical dif-ferentiation

Delegating Budgets when Agents Care About Autonomy

We consider resource allocation within an organisation when agents have a preference for autonomy and show how delegation bears on moral hazard and adverse selection. Agents may care about autonomy for reasons of job-satisfaction, status or greater reputation of perform-ance under autonomy. Separating allocations (overall budget and degree of delegation) are characterised depending on the preference for autonomy. As the latter is increasing, the de-gree of delegation assigned to productive and unproductive agents becomes more similar and may even be reversed when financial transfers are used. If agents’ preference for monetary rewards is sufficiently weak, the principal will not employ financial transfers and pooling arises if the preference for autonomy is strong.adverse selection; capital budgeting; delegation; moral hazard; non-responsiveness; resource allocation

Low Quality Leadership in Vertically Differentiated Duopoly

According to the business literature a firm's competitive position is determined by the nature of the market. In a 'premium' market, profit leadership falls to firms of- fering high quality, whereas in a 'value' market, it falls to low quality providers, which on grounds of a cost advantage capture a major market share. We incorporate this idea into a model of a vertically differentiated duopoly. In contrast to more conventional models, we assume that gross surplus from unit consumption consists of a benefit from quality and a baseline benefit. Consumers are heterogeneous (homoge-neous) with regard to the former (latter). Marginal cost increases in quality. We derive the quality-then-price equilibrium in a non-covered market and show that a re-duction in (maximum) willingness to pay relative to baseline benefit induces low quality leadership first in market share and subsequently in profit. Under low quality profit leadership, a minimum quality standard reduces consumer surplus if con-sumer's willingness to pay is sufficiently low and always reduces profits and welfare.Low quality leadership; vertical product differentiation;minimum quality standard.

Delegating budgets when agents care about autonomy

We consider resource allocation within an organisation and show how delegation bears on moral hazard and adverse selection when agents have a preference for autonomy. Agents may care about autonomy for reasons of job-satisfaction, status or greater reputation when performing well under autonomy. Separating allocations (overall budget and degree of delegation) are characterised depending on the preference for autonomy. As the latter increases, the degree of delegation assigned to productive and unproductive agents converges. If agents' preferences for monetary rewards are weak, the principal will not employ financial transfers. Pooling then arises under a strong preference for autonomy.adverse selection, capital budgeting, delegation, intrinsic motivation, moral hazard

Environmental Policy, Firm Location, And Product Differentiation: The Role of "Green" Preferences and Inter-firm Pollution

Endogenous firm location is analyzed in a discrete two-region-two-firm model of product differentiation. In a non-cooperative game, two regional governments first decide on the imposition (or lifting) of domestic production standards; firms then choose technology (clean or polluting), location and price. Equilibrium quality and location structure are determined analytically. The existence of consumers willing to pay a premium on clean production methods, and the possibility of inter-firm pollution alleviate the tendency of firms to delocate into the region with the weaker regulation; then, a deregulatory "race to the bottom" is less likely.environmental policy, product differentiation, firm location, institutional competi-tion, green preferences

Demographic and Geographic Determinants of Regional Physician Supply

Against the backdrop of an ongoing debate in most countries about the geographic (mal-)distribution of physician practices, we develop a theoretical and empirical framework to analyze how physician supply at regional level depends on demographic (population size, age struc- ture, fertility and migration) and geographic determinants. Particular attention is given (i) to local population change as a predictor of fu- ture demand for physician services, (ii) to the way in which the age- structure of the (potential patient) population and regional structure interact in shaping the pro�tability of treating the local population, and (iii) to cross-regional correlations in physician supply. Using re- gional data for Germany, we examine econometrically the determinants of regional physician supply. We �nd it to be negatively related to both the population share 60+ and the population share 20- in rural areas. While both population shares tend to have a less negative impact in urban areas, a pronounced positive e¤ect arises only for the share 20- in regions with agglomeration character. Net migration and natural balance turn out to be signi�cant positive as long-run determinants only, indicating thus their role as predictors of future demand. On av- erage, cross-regional spillovers in demand do not seem to be important determinants of regional supply.age structure, physician supply, regional population ageing, regional migration, overlapping generations, panel data, spatial model

Temporary Agency Work and Firm Performance: Evidence from German Establishment-Level Panel Data

This paper empirically examines the impact of temporary agency work on firm performance using panel data from German establishments. Thereby, special attention is devoted to the question, whether there are performance differences between firms using temporary agency workers (TAWs) as a buffer stock (flexibility strategy) and firms using TAWs for screening purposes (screening strategy). While the theoretical discussion on this issue does not lead to clear-cut results, our empirical investigation provides the following results. First, we find an inverse U-shaped relationship between the share of TAWs and firm performance. Second, we obtain that firms following the screening strategy are significantly more productive than firms following the flexibility strategy. These results are found to be valid in both cross-sectional and panel data settings, so they are robust to unobserved firm heterogeneity.Temporary agency work, firm performance, flexibility strategy, screening strategy

Quality Monitoring, Collusion and Sub-contracting

We discuss the social welfare improvement under centralized and decentralized hierarchies and focus on supervisoris ability to monitor quality. Although the possibility of collusion against the principal is eliminated under decentralized hierarchy, the decentralization is dominating only if supervisory accuracy is large enough in the case of public information. Private information about the accuracy hurts the principal under both hierarchies. The optimal effort in hierarchy A is pooling one. The dominance of decentralization over centralization depend combination of accuracies of both the low and the high type supervisor.auditing, collusion, delegation, hierarchy, quality

Complementarities between Workplace Organisation and Human Resource Management:

Owing to changes in the business environment, there has been a tremendous adoption of innovative workplace organisation (WO) and human resource (HR) practices during the last few decades. Assuming a holistic perspective on human resource management (HRM), the present study establishes the hypothesis of mutually reinforcing WO and HR practices that, thus, constitute a so-called high-performance work system. Precisely, it is argued that there may be a complementary relationship between a more decentralised way of allocating tasks and decision rights on the one hand and continuing training (or skilled labour), incentive pay or a more intensive use of long-term, as opposed to temporary, employment on the other. This hypothesis is examined empirically using latest nationally representative panel data of about 2,500 firms in Switzerland and applying econometric estimation techniques on the basis of an augmented Cobb-Douglas production function. The estimation results show statistically significant complementarities between the WO and HR practices mentioned above. In addition, socalled innovative HRM systems of mutually reinforcing WO and HR practices increase firm performance significantly. These results are robust to unobserved firm heterogeneity and to the problem of reversed causality.