The U-shaped Investment Curve: Theory and Evidence

This paper examines how the investment of financially constrained firms varies with their level of internal funds. We develop a theoretical model of optimal investment under financial constraints. Our model endogenizes the costs of external funds and allows for negative levels of internal funds. We show that the resulting relationship between internal funds and investment is U-shaped. In particular, when a firm's internal funds are negative and sufficiently low, a further decrease leads to an increase in investment. This effect is driven by the investor's participation constraint: when part of any loan must be used to close a financing gap, the investor will provide funds only if the firm invests at a scale large enough to generate the revenue that enables the firm to repay. We test our theory using a data set with close to 100,000 firm-year observations. The data strongly support our predictions. Among other results, we find a negative relationship between measures of internal funds and investment for a substantial share of financially constrained firms. Our results also help to explain some contrasting findings in the empirical investment literature.Financial constraints, capital market imperfections, financial contracts, investment, internal funds, investment-cash flow sensitivity

A General Model of Information Sharing in Oligopoly

Under which circumstances do oligopolists have an incentive to share private information about a stochastic demand or stochastic costs? We present a general model which includes virtually all models of the existing literature on information sharing as special cases. The analysis reveals that in contrast to the apparent inconclusivenss of previous results some simple principles determining the incentives to share information can be obtained. Most existing results are generalized and some interpretations are corrected, leading to a single general theory of the topic.Oligopoly, information sharing, stochastic demand, stochastic costs.

Product Differentiation, Uncertainty and the Stability of Collusion

The conventional view that product heterogeneity limits the scope for collusion among oligolpolists has been challenged in recent theoretical work. This paper provides an argument in support of the conventional view by emphasising the role of uncertainty. I introduce the idea that, with stochastic demand, an increase in the heterogeneity of products also leads to a decrease in the correlation of the firms? demand shocks. With imperfect monitoring, this makes collusion more difficult to sustain, as discriminating between random demand shocks and marginal deviations from the cartel strategy becomes more difficult. These effects are illustrated within a Hotelling-type duopoly model.Collusion, product differentiation, imperfect monitoring

Secure Search

Nowadays it is easy to track web users among websites: cookies, web bugs or browser fingerprints are very useful techniques to achieve this. The data collected can be used to derive a specific user profile. This information can be used by third parties to present personalized advertisements while surfing the web. In addition a potential attacker could monitor all web traffic of an user e.g. its search queries. As a conclusion the attacker knows the intentions of the web user and of the company he is working for. As competitors maybe very interested in such information, this could lead to a new form of industrial espionage. In this paper I present some of the techniques commonly used. I illustrate some problems caused by the usage of insecure transmission lines and compromised search engines. Some camouflage techniques presented may help to protect the web users identity. This paper is a based on the lecture "Secure Systems" teached by Professor Walter Kriha at the Media University (HdM) Stuttgart

Abschirmtests an RFID-Systemen

RFID-Systeme haben heutzutage einen immer größeren Anreiz: Zugangskontrolle, Bezahlsysteme, Diebstahlsicherung oder Identifikation (Personalausweis, Pass) sind nur einige Bespiele. RFID-Systeme erleichtern Tätigkeiten, bringen jedoch auch sicherheitsrelevante Probleme mit sich. Datenschützern sind RFID-Systeme schon lange ein Dorn im Auge, da dadurch die Privatsphäre des Trägers leichter ausgespäht und ein Bewegungsprofil erstellt werden kann. Der Schutz dieser Systeme und indirekt des Trägers durch Dritte ist unerlässlich. Aktuelle Zugangskontroll- und Identifikationssysteme verwenden neueste Sicherheitsfunktionen und Verschlüsselungen. Ist dieser Schutz nicht ausreichend genug, können RFID-Schutzhüllen das Auslesen durch Dritte erschweren oder gar komplett verhindern. Im Internet werden kommerzielle Hüllen Angeboten, die Schutz bieten sollen. Die Wirkung dieser Schutzhüllen wird in der vorliegenden Arbeit analysiert. Zusätzlich werden die abschirmenden Eigenschaften von weiteren Materialien untersucht. Die Arbeit ist in der Vorlesung "Spezielle Themen der mobilen Kommunikation" bei Prof. Dr. Joachim Charzinski entstanden

MySQL Cluster – Evaluation and Tests

Websites or web applications, whether they represent shopping systems, on demand services or a social networks, have something in common: data must be stored somewhere and somehow. This job can be achieved by various solutions with very different performance characteristics, e.g. based on simple data files, databases or high performance RAM storage solutions. For todays popular web applications it is important to handle database operations in a minimum amount of time, because they are struggling with a vast increase in visitors and user generated data. Therefore, a major requirement for modern database application is to handle huge data (also called big data) in a short amount of time and to provide high availability for that data. A very popular database application in the open source community is MySQL, which was originally developed by a swedisch company called MySQL AB and is now maintenanced by Oracle. MySQL is shipped in a bundle with the Apache web server and therefore has a large distribution. This database is easily installed, maintained and administrated. By default MySQL is shipped with the MyISAM storage engine, which has good performance on read requests, but a poor one on massive parallel write requests. With appropriate tuning of various database settings, special architecture setups (replication, partitioning, etc.) or other storage engines, MySQL can be turned into a fast database application. For example Wikipedia uses MySQL for their backend data storage. In the lecture Ultra Large Scale Systems and System Engineering teached by Walter Kriha at Media University Stuttgart, the question Can a MySQL database application handle more then 3000 database requests per second? came up some time. Inspired by this issue, I got myself going to find out, if MySQL is able to handle such a amount of requests per second. At that time I also read something about the high availability and scalability solution MySQL Cluster and it was the right time to test the performance of that solution. In this paper I describe how to set up a MySQL database server with the additional MySQL Cluster storage engine ndbcluster and how to configure a database cluster. In addition I execute some database tests on that cluster to proof that its possible the get a throughput of >= 3000 read requests per second with a MySQL database

Product differentiation, uncertainty and price coordination in oligopoly.

This thesis consists of three self-contained analyses of models with price-setting firms. It explores the relationships between different sources of market imperfection that may be present simultaneously: product differentiation, imperfect information and collusive pricing. Chapter 2 analyses the circumstances under which oligopolists have an incentive to exchange private information on unknown demand or cost parameters. It presents general model which encompasses virtually all models in the current literature on information sharing as special cases. Within this unifying framework it is shown that in contrast to the apparent inconclusiveness of previous results, some simple principles determining the incentives for firms to share information can be obtained. Existing results are generalised, some previous interpretations questioned and new explanations offered. Chapter 3 addresses the question of how price setting between firms in a spatial retail market is affected if the relevant consumers commute between their home and their workplace and try to combine shopping with commuting. It is shown within a specific model that for small commuting distances, an increase in commuting leads to a decrease of equilibrium prices, since due to a reduction of effective travel costs the firms' products become better substitutes. Under quite general conditions, however, larger or dispersed commuting distances lead to the nonexistence of a price equilibrium. Chapter 4 analyses the question how product differentiation affects the scope for oligopolists to collude on prices. It suggests a precise theoretical foundation for the conventional view that heterogeneity is a factor hindering collusion, a view which has been challenged in recent theoretical work. It is argued that, in a world of uncertainty, an increase in the heterogeneity of products leads to a decrease in the correlation of the firms' demand shocks. With imperfect monitoring, this makes collusion more difficult to sustain, as discriminating between random demand shocks and deviations from the cartel strategy becomes more difficult

Monitoring policy and organizational forms in franchised chains

ABSTRACT: Franchising is nowadays a prominent way to organize the distribution sector. While previous literature suggests that monitoring issues are a critical determinant of organizational choices, it is rather silent on the optimal monitoring strategy once the organization of the chain is set. In this article we analyze the monitoring policy of chains with both franchised and companyowned units. We develop a model in which a chain monitors its outlets under asymmetric information on local demands and managers' efforts. We show that partial monitoring (i.e. when the franchisor monitors only a subset of its outlets) represents an optimal monitoring policy. Second, we identify the units that should be monitored. Finally, we discuss the impact of information technologies and outlet location on monitoring policy and how it may affect the proportion of franchised and company-owned units within the mixed chains