Competing for Ownership

We develop a tractable model of the allocation of ownership and control in firms in competitive markets that permits study of how the scarcity of assets in the market translates into control allocations inside the organization. The model identifies a price-like mechanism whereby local liquidity or productivity shocks propagate and lead to widespread organizational restructuring. Firms will be more integrated when the terms of trade are more favorable to the short side of the market, when liquidity is unequally distributed among existing firms and following a uniform increase in productivity. Shocks to the first two moments of the liquidity distribution have multiplier effects on the corresponding moments of the distribution of ownership.

Competitive Prices and Organizational Choices

We construct a price-theoretic model of integration decisions and show that these choices may adversely affect consumers, even in the absence of monopoly power in supply and product markets. Integration is costly to implement but is effective at coordinating production decisions. The price of output helps to determine the organizational form chosen: there is an inverted-U relation between the degree of integration and product prices. Moreover, organizational choices affect output: integration is more productive than non-integration at low prices, and less productive at high prices. Since shocks to industries affect product prices, reorganizations are likely to take place in coordinated fashion and be industry specific, consistent with the evidence. Since the price range in which integration maximizes productivity generally differs from the one in which it maximizes managerial welfare, organizational choices will often be second-best inefficient. We show that there are instances in which entry of low-cost suppliers can hurt consumers by changing the terms of trade in the supplier market, thereby inducing reorganizations that raise prices.

Managerial Firms, Vertical Integration, and Consumer Welfare

We show that vertical integration decisions of managers may affect adversely consumers even in the absence of monopoly power in either supply or product markets. This effect is most likely to come about when demand is initially high and there is a negative supply shock or when demand is low and there is a positive demand shock. The results are robust to the introduction of active shareholders and to other extensions.

Risk factors for death in hospitalized dysentery patients in Rwanda.

To evaluate the management of severe dysentery cases in in-patient facilities during an epidemic of Shigella dysenteriae type 1 (Sd1), and to identify the factors associated with the risk of death, we conducted a prospective cohort study in 10 Rwandese hospitals between September and December 1994. Data were obtained from 849 cases admitted to hospitals with diarrhoea and visible blood in stools. The proportion of patients with persistent bloody diarrhoea was 51.0% at treatment day 3 and 27.9% at treatment day 5. At discharge, 79.9% had improved or were cured. The case fatality ratio was 13.2%, higher for patients treated with nalidixic acid than for those treated with ciprofloxacin (12.2% vs. 2.2%, RR = 5.80, 95% CI = 0.83-40.72). In a logistic regression model three risk factors were significantly associated with an increased risk of death during hospitalization: severe dehydration on admission (adjusted OR = 2.79, 95% CI = 1.46-5.33), age over 50 (adjusted OR vs. 5-49 age group = 3.22, 95% CI = 1.70-6.11) and prescription of nalidixic acid (adjusted OR vs. ciprofloxacin = 8.66, 95% CI = 1.08-69.67). Those results were consistent with reported high levels of resistance of Sd1 to the commonest antibiotics, including nalidixic acid. Patients belonging to groups with a higher risk of dying should be given special medical attention and supportive care. In areas of high resistance to nalidixic acid, severe cases of dysentery should be treated with fluoroquinolones in order to reduce the mortality associated with these epidemics

In situ TEM study of twin boundary migration in sub-micron Be fibers

Deformation twinning in hexagonal crystals is often considered as a way to palliate the lack of independent slip systems. This mechanism might be either exacerbated or shut down in small-scale crystals whose mechanical behavior can significantly deviate from bulk materials. Here, we show that sub-micron beryllium fibers initially free of dislocation and tensile tested in-situ in a transmission electron microscope (TEM) deform by a $\{ 10\bar{1}2 \}$ $\langle 10\bar{1}1 \rangle$ twin thickening. The propagation speed of the twin boundary seems to be entirely controlled by the nucleation of twinning dislocations directly from the surface. The shear produced is in agreement with the repeated lateral motion of twinning dislocations. We demonstrate that the activation volume ($V$) associated with the twin boundary propagation can be retrieved from the measure of the twin boundary speed as the stress decreases as in a classical relaxation mechanical test. The value of $V \approx 8.3 \pm 3.3 \times 10^{-29}m^3$ is comparable to the value expected from surface nucleation.Comment: 13 pages, 9 figure

Trade Liberalization and Organizational Choice

We embed a simple incomplete-contracts model of organization design in a standard two-country, perfectly-competitive trade model to examine how the liberalization of product and factor markets affects the ownership structure of firms. In our model, managers decide whether or not to integrate their firms, trading off the pecuniary benefits of coordinating production decisions with the private benefits of operating in their preferred ways. The price of output is a crucial determinant of this choice, since it affects the size of the pecuniary benefits. In particular, non-integration is chosen at "low" and "high" prices, while integration occurs only at moderate prices. Organizational choices also depend on the terms of trade in supplier markets, which affect the division of surplus between managers. We obtain three main results. First, joint product and factor market integration leads to the convergence of organization design across countries. Second, even in the absence of factor movements, the price changes triggered by liberalization of product markets can lead to significant organizational restructuring within countries. Third, the removal of barriers to factor mobility can induce further organizational changes, sometimes adversely affecting consumers, which suggests a potential complementarity between trade policy and corporate governance policy.

Trade Liberalization and Organizational Change

We embed a simple incomplete-contracts model of organization design in a standard two-country perfectly-competitive trade model to examine how the liberalization of product and factor markets affects the ownership structure of firms. In our model, managers decide whether or not to integrate their firms, trading off the pecuniary benefits of coordinating production decisions with the private benefits of operating in their preferred ways. The price of output is a crucial determinant of this choice, since it affects the size of the pecuniary benefits. In particular, non-integration is chosen at “low” and “high” prices, while integration occurs at moderate prices. Organizational choices also depend on the terms of trade in supplier markets, which affect the division of surplus between managers. We obtain three main results. First, even when firms do not relocate across countries, the price changes triggered by liberalization of product markets can lead to significant organizational restructuring within countries. Second, the removal of barriers to factor mobility can lead to inefficient reorganization and adversely affect consumers. Third, “deep integration” the liberalization of both product and factor markets ­ leads to the convergence of organizational design across countries.Firms, Contracts, Globalization

In vitro susceptibility of 120 strains of Neisseria gonorrhoeae isolated in Kyrghyzstan.

BACKGROUND: The World Health Organization has established a worldwide program for gonococcal antimicrobial surveillance, but so far no data on gonococcal susceptibility in Central Asia are available. GOAL: The need for biological data on the susceptibility of Neisseria gonorrhoeae in Kyrghyzstan, to enable adaptation of the national treatment protocol for gonococcal infections, led Médecins Sans Frontières and Epicentre to conduct a survey in collaboration with the Alfred Fournier Institute in Paris and the health authorities in Bishkek. STUDY DESIGN: In vitro susceptibility of N gonorrhoeae strains was determined with use of the reference agar-plate dilution technique. RESULTS: Results for 11 antibiotics tested on 120 strains of gonococci showed a low proportion (11.7%) of penicillinase-producing N gonorrhoeae and high proportions of intermediate or resistant strains to the majority of the antibiotics tested, including fluoroquinolones (>or=25% of strains resistant). All the strains were susceptible to spectinomycin, and only two strains had decreased susceptibility to cefixime. CONCLUSION: The therapeutic choices available in Kyrghyzstan appear to be limited to cephalosporins and spectinomycin

Monotone Matching in Perfect and Imperfect Worlds

We study frictionless matching models in large production economies with and without market imperfections and/or incentive problems. We provide necessary and sufficient distribution-free conditions for monotone matching which depend on the relationship between what we call the segregation payoff -- a generalization of the individually rational payoff -- and the feasible set for a pair of types. Our approach yields some new techniques for computing equilibria, particularly when utility is not transferable. It also helps to underscore the effects of imperfections, which have two distinct effects that are relevant for equilibrium matching patterns: they can overwhelm the complementarity properties of the production technology and they can introduce nontransferabilities that make equilibrium matching inefficient. We also use our framework to reveal the source of differences in the comparative static properties of some models in the literature and to explore the effects of distribution on the equilibrium matching pattern

Wealth Effects, Distribution and the Theory of Organization

We construct a general equilibrium model of firm formation in which organization is endogenous. Firms are coalitions of agents providing effort and investment capital. Effort is unobservable unless a fixed monitoring cost is paid, and borrowing is subject to a costly state verification problem. Because incentives vary with an agents wealth, different types of agents become attractive firm members under different circumstances. When borrowing is not costly, firms essentially consist of one type of agent and are organized efficiently. But when the costly state verification problem is sufficiently severe, firm organization will depend on the distribution of wealth: with enough inequality, it will tend to be dictated by incentives of rich agents to earn high returns to wealth, even if the chosen organizational form is not a technically efficient way to provide incentives