Rules, Communication and Collusion: Narrative Evidence from the Sugar Institute Case

Detailed notes on weekly meetings of the sugar refining cartel show how communication helps firms collude, and so highlight the deficiencies in the current formal theory of collusion. The Sugar Institute did not fix prices or output. Prices were increased by homogenizing business practices to make price cutting more transparent. Meetings were used to interpret and adapt the agreement, coordinate on jointly profitable actions, ensure unilateral actions were not misconstrued as cheating, and determine whether cheating had occurred. In contrast to established theories, cheating did occur, but sparked only limited retaliation, partly due to the contractual relations with selling agents.

Diversity, Social Goods Provision, and Performance in the Firm

The last decade has seen a growing interest among economists on the effect of diversity on the provision of social goods and the stock of social capital. Indeed, in the workplace, cooperation, trust, and other social goods may be important elements of the smooth functioning of an office, but firm owners ultimately care about an office’s performance, as reflected in revenues, costs, and profits. We explore this next logical question: how does diversity affect ultimate performance? We have a unique data set from a firm which operates numerous small offices in the United States and abroad. They have provided us with eight years of individual-level employee survey data, which measure quantities such as level of cooperation, as well as office-level measures of diversity and performance over that period. We find some evidence that more homogeneous offices enjoy higher levels of social goods provision but that those offices do not perform any better and may actually perform worse. We speculate that one possible reason that the more homogeneous offices do not perform better despite higher levels of social goods provision is that they do not have as diverse a portfolio of skills, talents, and interests on which to draw.diversity, social goods

Predation and Its Rate of Return: The Sugar Industry, 1887-1914

We study entry into the American sugar refining industry before World War I. We show that the price wars following two major entry episodes were predatory. Our proof is twofold: by direct comparison of price to marginal cost, and by construction of predicted competitive price cost margins that we show to exceed observed margins. We argue that predation occurred only when the relative cost of it to the dominant firm was small, and that it was most probably used to deter future capacity additions. It was also used to lower the purchase price of preexisting firms after one entry episode.

Should Firms Be Allowed to Indemnify Their Employees for Sanctions?

Policymakers have questioned whether firms should be allowed to indemnify their employees for personal sanctions for corporate crimes. This article provides the first formal analysis of this form of indemnification. Targeting employees with unindemnifiable sanctions carries the social cost of exposing employees of law-abiding firms to the risk of mistaken government prosecution. Deterrence is typically achieved more efficiently by sanctioning the firm alone. We find the circumstances under which the government shouldadditionally sanction employees to be quite limited and the circumstances under which the government should ban indemnification of these sanctions to be more limited still. One circumstance is when an unindemnifiable employee sanction provides prosecutors with leverage to adjust the employee\u27s sanction in exchange for his cooperation against the firm

The Sugar Institute Learns to Organize Information Exchange

This paper describes information exchange under the Sugar Institute, the trade association of U.S. domestic sugar cane refiners, between 1928 and 1936. The Institute collected production and delivery data from the individual firms and returned it to them in aggregated form. Attempts to exchange sales data were stymied by the larger firms. Surprisingly, there is no indication of mis-reporting of statistics by Institute members, although statistics were, at times, withheld. The paper concentrates on the evolution of the Institute. Proposals for successor organizations show that a workable mechanism required greater discretion to the central authority and greater voting rights to the larger firms.

Gradual Incorporation of Information into Stock Prices: Empirical Strategies

This paper explores environments in which either the revelation or diffusion of information, or its incorporation into stock prices, is gradual, and develops appropriate estimation techniques. This paper has implications both for event study methodology and for understanding the process by which stock prices incorporate information. Two environments are highlighted. First, information is often not revealed in one announcement but rather through a process of gradual public revelation, which may not be completely observable by a researcher. We examine the effect of the evolution of the Clinton health care reform proposal on pharmaceutical stock prices. We estimate the expected path of market-adjusted pharmaceutical prices over September 1992- October 1993 by isotonic regression, and find that the major portion of the decline in stock prices occurred gradually, and did not correspond to identified news events. Second, the trading process itself may incorporate private information into stock prices gradually. That is an implication of the Kyle (1985) model, in which one or a small number of informed traders use their market power over their private information to maximize profits dynamically. We use the functional form predictions from Kyle in our estimation, and the results from a sample of targets of tender offers are consistent with the model.

Identifying the deficiencies of current diagnostic criteria for neurofibromatosis 2 using databases of 2777 individuals with molecular testing

Purpose We have evaluated deficiencies in existing diagnostic criteria for neurofibromatosis 2 (NF2). Methods Two large databases of individuals fulfilling NF2 criteria (n = 1361) and those tested for NF2 variants with criteria short of diagnosis (n = 1416) were interrogated. We assessed the proportions meeting each diagnostic criterion with constitutional or mosaic NF2 variants and the positive predictive value (PPV) with regard to definite diagnosis. Results There was no evidence for usefulness of old criteria “glioma“ or “neurofibroma.” “Ependymoma” had 100% PPV and high levels of confirmed NF2 diagnosis (67.7%). Those with bilateral vestibular schwannoma (VS) alone aged ≥60 years had the lowest confirmation rate (6.6%) and reduced PPV (80%). Siblings as a first-degree relative, without an affected parent, had 0% PPV. All three individuals with unilateral VS and an affected sibling were proven not to have NF2. The biggest overlap was with LZTR1-associated schwannomatosis. In this category, seven individuals with unilateral VS plus ≥2 nondermal schwannomas reduced PPV to 67%. Conclusions The present study confirms important deficiencies in NF2 diagnostic criteria. The term “glioma” should be dropped and replaced by “ependymoma.” Similarly “neurofibroma” should be removed. Dropping “sibling” from first-degree relatives should be considered and testing of LZTR1 should be recommended for unilateral VS

A Service of zbw Leibniz-Informationszentrum Wirtschaft Leibniz Information Centre for Economics Diversity, Social Goods Provision, and Performance in the Firm Diversity, Social Goods Provision, and Performance in the Firm

Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The last decade has seen a growing interest among economists on the effect of diversity on the provision of social goods and the stock of social capital. Indeed, in the workplace, cooperation, trust, and other social goods may be important elements of the smooth functioning of an office, but firm owners ultimately care about an office's performance, as reflected in revenues, costs, and profits. We explore this next logical question: how does diversity affect ultimate performance? We have a unique data set from a firm which operates numerous small offices in the United States and abroad. They have provided us with eight years of individual-level employee survey data, which measure quantities such as level of cooperation, as well as office-level measures of diversity and performance over that period. We find some evidence that more homogeneous offices enjoy higher levels of social goods provision but that those offices do not perform any better and may actually perform worse. We speculate that one possible reason that the more homogeneous offices do not perform better despite higher levels of social goods provision is that they do not have as diverse a portfolio of skills, talents, and interests on which to draw. Terms of use: Documents in JEL-Code: J16, L20