Product-Market Competition and Managerial Autonomy

It is often argued that competition forces managers to make better choices, thus favoring managerial autonomy in decision making. I formalize and challenge this idea. Suppose that managers care about keeping their position or avoiding interference, and that they can make strategic choices that affect both the expected profits of the firm and their riskiness. Even if competition at first pushes the manager towards profit maximization as commonly argued, I show that further increases in competitive forces might as well lead him to take excessive risks if the threat on his position is strong enough. To curb this possibility, the principal-owner optimally reduces the degree of autonomy granted to the manager. Hence higher levels of managerial autonomy are more likely for intermediate levels of competition.product-market competition, authority, decision making, delegation, autonomy

Reducing the Asymmetry of Information Through the comparison of the Relative Efficiency of Several Regional Monopolies

Following the process initiated by Chile in the early 1980s, most countries in South America have undergone deep transformations in their electric industries. In this new playing field, the comparison of the relative efficiency of several regional monopolies seems to be a potentially valuable tool to reduce the asymmetry of information that is involved in the regulator-firm relationship. However, to be useful in the regulatory process, productive frontier estimates require a broad set of comparable firms and detailed information about them. This availability of data, although a necessary condition, is far from sufficient. One must also count on adequate techniques. In this paper we carry out an efficiency analysis in the electricity distribution sector in South America using different techniques, stating the conditions under which they become a useful tool in crafting an efficient regulation of the firms in that sector. Despite the particular results found here, the paper underscores the importance of conducting a consistency analysis whenever using efficiency measures in applied regulation.electric industries; efficiency; regional monopolies; asymmetry of information

The case for international coordination of electricity regulation : evidence from the measurement of efficiency in South America

A decade long experience shows that monitoring the performance of public and private monopolies in South America is proving to be the hard part of the reform process. The operators who control most of the information needed for regulatory purposes have little interest in volunteering their dissemination unless they have an incentive to do so. The authors argue that, in spite of, and maybe because of, a much weaker information base and governance structure, South America's electricity sector could pursue an approach that relies on performance rankings based on comparative efficiency measures. The authors show that with the rather modest data currently available publicly, such an approach could yield useful results. They provide estimates of efficiency levels in South America's main distribution companies between 1994 and 2000. Moreover, the authors show how relatively simple tests can be used by regulators to check the robustness of their results and strengthen their position at regulatory hearings.Economic Theory&Research,Environmental Economics&Policies,Enterprise Development&Reform,Labor Policies,Health Monitoring&Evaluation,Environmental Economics&Policies,Economic Theory&Research,Geographical Information Systems,Health Monitoring&Evaluation,Educational Technology and Distance Education

Una Introducción a la Estimación No Paramétrica de Fronteras de Eficiencia

El interés en las fronteras de producción y la medición de la eficiencia relativa a estas fronteras ha crecido considerablemente en las últimas dos décadas y en los últimos años ha habido un rápido incremento en el número de trabajos publicados sobre el análisis de la eficiencia en la producción. El objetivo de este artículo es presentar una de las técnicas analíticas que, simultáneamente, caracteriza la estructura de una tecnología eficiente de producción (la frontera de producción) y mide la eficiencia en relación a dicha frontera. La técnica a la que hacemos mención es la programación matemática (lineal), la cual provee una medida de la eficiencia relativa a una frontera de producción no paramétrica. Aplicamos luego las técnicas de programación lineal a una muestra de empresas de distribución de electricidad para ilustrar el tipo de información que pueden generar.fronteras de producción; eficiencia relativa; producción no paramétrica; empresas de distribución de electricidad

Asset Specificity and Vertical Integration: Williamson’s Hypothesis Reconsidered

A point repeatedly stressed by transaction cost economics is that the more specific the asset, the more likely is vertical integration to be optimal. In spite of the profusion of empirical papers supporting this prediction, recent surveys and casual observation suggest that higher levels of asset specificity need not always lead to vertical integration. The purpose of this paper is to uncover some of the factors driving firms to (sometimes) choose to remain separated, rather than integrate, in the presence of high specificity. Its main economic message is that in a world where outside options matter and investments are multidimensional, high levels of asset specificity can foster nonintegration: a low level of specificity provides the most misdirected incentives when transacting in a market (because the outside option of external trade becomes so tempting), thus making a stronger case for nonintegration when specificity is high.relational contracts, asset specificity, property rights, vertical integration, outsourcing

Are cost models useful for telecoms regulators in developing countries?

Worldwide privatization of the telecommunications industry, and the introduction of competition in the sector, together with the ever-increasing rate of technological advance in telecommunications, raise new and critical challenges for regulation. Fo matters of pricing, universal service obligations, and the like, one question to be answered is this: What is the efficient cost of providing the service to a certain area or type of customer? As developing countries build up their capacity to regulate their privatized infrastructure monopolies, cost models are likely to prove increasingly important in answering this question. Cost models deliver a number of benefits to a regulator willing to apply them, but they also ask for something in advance: information. Without information, the question cannot be answered. The authors introduce cost models and establish their applicability when different degrees of information are available to the regulator. They do no by running a cost model with different sets of actual data form Argentina's second largest city, and comparing results. Reliable, detailed information is generally scarce in developing countries. The authors establish the minimum information requirements for a regulator implementing a cost proxy model approach, showing that this data constraint need not be that binding.ICT Policy and Strategies,Decentralization,Environmental Economics&Policies,Economic Theory&Research,Business Environment,ICT Policy and Strategies,Environmental Economics&Policies,Geographical Information Systems,Economic Theory&Research,Educational Technology and Distance Education

Desagregación de Redes en Telecomunicaciones. Una Visión desde la Política de Defensa de la Competencia

Este trabajo discute la propuesta de permitir el acceso desagregado al bucle local en redes de telecomunicaciones desde una visión más amplia que la política regulatoria tradicional; la discusión se aborda desde un enfoque emparentado con las políticas de defensa de la competencia ligadas más estrictamente al concepto de facilidad esencial. El trabajo reafirma la necesidad de contar con una metodología económica objetiva de determinar las condiciones de competencia de mercado para luego proceder a la implementación de políticas de acceso abierto. Por supuesto no escapa a este trabajo la discusión relativa a los efectos esperables de la desagregación en materia de competencia y en cuanto a las restricciones que se enfrentan cuando esta medida se implementa con estructuras tarifarias que no siguen fielmente los verdaderos costos de producción del servicio. Luego, el trabajo hace un breve repaso de alguna experiencia internacional relevante en esta materia. Finalmente, en la última sección, se realizan algunas reflexiones de política regulatoria sobre la base de las conclusiones arribadas.redes de telecomunicaciones; políticas de defensa de la competencia; competencia de mercado; estructuras tarifarias

Competencia por Comparación en el Sector de Distribución Eléctrica: El Papel de la Política de Defensa de la Competencia

En este trabajo, abordamos en primer lugar el problema de la interacción entre las políticas regulatorias y de defensa de la competencia en relación a la potencial implementación del mecanismo regulatorio de competencia por comparación en el sector de distribución eléctrica en Argentina. En segunda instancia, se estudia la concentración accionaria en distribución eléctrica, y los riesgos de tal proceso respecto de la integración vertical de la industria y la futura desregulación de la venta minorista de electricidad.políticas regulatorias; sector de distribución eléctrica

Career choices and the evolution of the college gender gap

Fil: Rossi, Martín A. Universidad de San Andrés. Departamento de Economía; Argentina.Fil: Ruzzier, Christian. Universidad de San Andrés. Departamento de Economía; Argentina.We propose a complementary explanation for the evolution of the college gender gap that emphasizes the raising opportunity cost of pursuing a college degree for men, due to the increase in the rewards to becoming a superstar in men-dominated occupations, like professional sports. We support our expla- nation with causal evidence from a natural experiment in European soccer markets that provides exogenous variation in male earnings in a superstar path. Consistent with our story, we nd a signi cant positive e ect of an increase in male superstar earnings on the ratio of female to male tertiary enrollment in college education