Complementarity Among Vertical Integration Decisions: Evidence from Automobile Product Development

This paper examines complementarity among vertical integration decisions in automobile product development. Though most research assumes that contracting choices are independent of each other, contracting complementarity arises when the returns to a single vertical integration decision are increasing in the level of vertical integration associated with other contracting choices. First, effective coordination may depend on the level of (non-contractible) effort on the part of each agent; contracting complementarity results if coordination efforts are interdependent and vertical integration facilitates a higher level of non-contractible effort. Second, effective coordination may require the disclosure of proprietary trade secrets, and the potential for expropriation by external suppliers may induce complementarity among vertical integration choices. We provide evidence for complementarity in product development contracting by taking advantage of a detailed dataset that includes the level of vertical integration and the contracting environment for individual automobile systems in the luxury automobile segment. Using an instrumental variables framework that distinguishes complementarity from unobserved firm-level factors, the evidence is consistent with the hypothesis that contracting complementarity is an important driver of vertical integration choices. The findings suggest that contracting complementarity may be particularly important when coordination is important to achieve but difficult to monitor.

Evaluating Alternative Safety Net Programs in Alberta: A Firm-level Simulation Analysis

This paper examines alternative risk management strategies in terms of their effectiveness for three representative Alberta farm operations. Stochastic dynamic simulation methods are used to model financial performance for these farms, and alternative risk management programs are compared in terms of their ability to stabilize returns, support income and reduce the probability of bankruptcy. The results suggest that government programs such as the Net Income Stabilization Account (NISA) program or the Farm Income Disaster Program (FIDP) in Alberta have some benefits in terms of supporting income levels and reducing the chances of farm failure. Neither program is very effective, however, in stabilizing year to year income or cash flow for the farm operations. As a risk management program, FIDP is more effective than NISA but this improved performance comes at the price of higher government costs. Performance of NISA and FIDP, relative to alternative risk management programs and strategies such as forward contracting or crop insurance, is mixed. In some cases, NISA does not seem to provide benefits beyond those available from other strategies, while FIDP tends to perform better than the alternatives. Finally, while increased debt load weakens firm financial performance, NISA and FIDP still provide some benefits in terms of supporting income and reducing the probability of bankruptcy.Farm Management, Risk and Uncertainty,

Curbing Corporate Inversions: A Study of National and International Efforts to Establish Corporate Tax Equity

In recent years, the number of U.S. companies trying to merge with a foreign company and thereby reincorporate themselves in countries with a lower corporate tax rate – a practice known as corporate inversion – has skyrocketed. The public outcry in 2014 against corporate inversions led the U.S. Treasury to release a series of new anti-inversion regulations, and more policy changes are in the process of being debated. At the same time as this national discussion on the harmful effects corporate inversions have on the U.S. tax base is progressing, the Organization for Economic Cooperation and Development (OECD) is in the process of working with G-20 countries to develop a Base Erosion and Profit Shifting Action Plan, a plan that aims in part to bring about major international corporate tax reform. In light of these developments, this paper aims to explain the incentives behind corporate inversions and the different policies being discussed on both the national and international level that could discourage this practice. Through the analysis of government reports and interviews with experts, this paper shows that actions on the national level to stop inversions are indeed possible, although the most meaningful actions will probably be carried out by the Administration, not Congress. The OECD effort to create a multilateral tax instrument, however, is much less promising; the governments currently involved have strongly divergent interests when it comes to setting standards for corporate taxation, and developing countries are almost completely left out of the conversation. Based on these conclusions, the paper makes recommendations on measures to curb inversions and advises that the United States not wait for an international solution to its national problem of tax base erosion

The Corporatization of Justice: Clashes Between International Arbitration and National Environmental Regulations

In light of the controversies surrounding international arbitration systems and the growing threat of global climate change, this paper aims to answer the following questions: Do international trade arbitration mechanisms undermine national environmental regulations and initiatives, and if so, in what ways does this happen, and how might these mechanisms be reformed? By applying four different theoretical models of international arbitration to four cases studies illustrating how state environmental policies have clashed with private interests in the past, I develop a comprehensive power-based model of arbitration that provides insight into international arbitration systems\u27 current inequities and how these systems may be reformed to allow governments to better meet modern environmental challenges. Recommended solutions include giving international environmental agreements more legal teeth, establishing an arbitration defense fund for developing countries via the World Bank, and creating a class action-style arbitration platform that does not require representation by a corporation or state government

Identifying Best Practices for Snowplow Route Optimization

Well-designed winter maintenance routes result in snow and ice control service that is both more effective, because roads are cleared more rapidly, and more cost efficient, because deadheading, route overlap and other inefficiencies are reduced or eliminated. There are an increasing number of computerized tools to facilitate the routing process, but these tools are not yet widely used by winter maintenance practitioners. The purpose of this report is to provide practitioners with an overview of computerized route optimization processes and concrete recommendations about how to ensure that route improvement efforts produce actionable results. Recommendations are synthesized from nine recent and ongoing snowplow routing projects using a variety of computerized routing tools. Project descriptions, based on interviews with project personnel, focus on project goals, optimization software features used, and lessons learned. Multiple route optimization projects report route length reductions on the order of 5% to 10%, with reductions as high as 50% reported in one case. These snowplow route optimization projects show that route optimization is a powerful tool for improving routing efficiency but that it does not replace the need for expert judgment in the route design process. Successful route optimization projects rely on close cooperation between experienced winter maintenance professionals and the individuals conducting the route optimization as well as a highly accurate, snowplow-routing specific representation of the road network. Successful projects also include time to review and revise new routes to identify potential problem spots prior to implementation

Long-Term & Short-Term Measures of Roadway Snow and Ice Control Performance

Roadway snow and ice control (RSIC) serves a vital public safety function and reduces the economic losses caused by winter weather. The effectiveness and efficiency of the RSIC response requires that managers have access to meaningful performance measures that accurately capture the roadway conditions throughout the network. Performance measurement metrics provide a baseline for evaluating agency operations and improve agency transparency. Effective longterm performance measures can provide quality assurance of staff productivity, equipment allocation, and process evaluation. Effective short-term performance measurement can provide quality control for real-time productivity improvement and efficient resource use. The primary performance measures for RSIC programs by state DOTs are 1) operating speed recovery time and 2) time to achieve bare pavement. There is a continued need for objective, outcome-based performance metrics for RSIC operations. The overall goal of this project was to develop new performance measures intended to improve the performance of RSIC activities by the VTrans fleet and a plan for how they could be implemented full-scale. Two specific objectives were planned by the research team at the University of Vermont Transportation Research Center to achieve this goal: • Develop a long-term, seasonal “time-to-normal” measure utilizing readily available speed data • Pilot-test a short-term measure utilizing imagery data collected and processed in real-time to compare roadway conditions in front of, and behind, an active RSIC vehicle In this study, a new long-term performance measure, the Average Distribution Deviation (ADD), was developed to measure changes in the distribution of vehicle speeds after winter weather events. Measuring the recovery time for the entire distribution of vehicle speeds, rather than the recovery of a single measure like the mean speed, provides a more comprehensive assessment of RSIC performance. A thermal imaging video system was pilot tested as a short-term measure of RSIC performance. These two long- and shortterm RSIC performance measures provide distinct and complimentary assessments of RSIC operations. The long-term ADD performance metric can be used to measure the time to complete RSIC operations on a storm-by-storm or seasonal basis, while the short-term, video-based performance measure is designed to provide near instantaneous feedback that can be used to inform the rate of application of chemicals by, and routing of, snow and ice control vehicles