On marriage and migration

Marriage, migration and related phenomena such as marital stability, fertility and investment in human capital may be better explained by studying marriage and migrationjointly. We thus proceed in this paper to explore the role of migration in obtaining joint labour-market and marriage-market equilibrium. This facilitates identification of several novel and testable hypotheses.     

Bargaining within the Supply Chain and Its Implications in an Industry

Our main objective is to investigate the influence of the bargaining power within a chain on its industry. As a building block, we first discuss the implications of bargaining within a single chain by considering an asymmetric Nash bargaining over the wholesale price (BW). We show that both Manufacturer Stackelberg (MS) and vertical integration (VI) strategies are special cases of the BW contract. We then develop the Nash equilibrium in an industry with two supply chains that use BW. We identify the profit‐maximizing (coordinating) bargaining power within this industry. We show that when a chain is not monopolistic, VI does not coordinate the chain and that the MS contract, where the manufacturer has all the bargaining power, is coordinating when competition is intense. We find that the main determinant of the equilibrium in mature industries is to respond well to the actions of the competing chain rather than to directly maximize the profit of each chain. That is, the equilibrium does not necessarily maximize the profit of the entire industry. While a coordination of the industry could then increase the profitability of both chains, such a coordination is likely against antitrust law. Moreover, if one chain cannot change its actions, the other chain may unilaterally improve its profitability by deviating from the equilibrium. Our results lead to several predictions supported by empirical findings, such as that in competitive industries chains will work “close to” the MS contract.     

The Design and Introduction of Product Lines When Consumer Valuations are Uncertain

This article presents a model of the design and introduction of a product line when the firm is uncertain about consumer valuations for the products. We find that product line introduction strategy depends on this uncertainty. Specifically, under low levels of uncertainty the firm introduces both models during the first period; under higher levels of uncertainty, the firm prefers sequential introduction and delays design of the second product until the second period. Under intermediate levels of uncertainty the firm's first product should be of lower quality than one produced by a myopic firm that does not take product line effects into consideration. We find that when the firm introduces a product sequentially, the strategy might depend on realized demand. For example, if realized demand is high, the firm's second product should be a higher‐end model; if demand turns out to be low, the firm's second product should be a lower‐end model or replace the first product with a lower‐end model.     

The choice of factor mobility in a dynamic world

This paper compares the steady-state welfare implications of opening a two-country overlapping-generations world to international labor or capital mobility. By capturing the dual nature of labor mobility through the effect of migrants' savings on capital formation, this dynamic setting recovers the asymmetry between capital and labor denied to them in the existing static literature. It is shown that the optimal choice of factor mobility from a national viewpoint depends on the state of the economy with respect to the Golden Rule and on migrants' average savings ratio with respect to that of non-migrants.I would like to thank anonymous referees for useful comments.     

The impact of differences in the levels of technology on international labor migration

In this paper we analyze the patterns of international labor migration in a two-country world where one country's production technology is superior to that of the other country. We exploit an overlapping-generations model which enables us to trace the relevant dynamic considerations. We find that in the absence of international capital movements labor will migrate from the technologically-inferior to the technologically-superior country unless the stationary autarkic equilibrium is characterized by over-investment relative to the Golden Rule and the long-run elasticity of the interest rate with respect to the technological level is sufficiently large, in which case migration will be from the technologically-superior country.This paper, presented at the 6th World Congress of the Econometric Society, Barcelona, August 22–29, 1990, is a revised version of Discussion Paper No. 34, Harvard University Migration and Development Program.     

On the Benefits of Risk Pooling in Inventory Management

We analyze the benefits of inventory pooling in a multi‐location newsvendor framework. Using a number of common demand distributions, as well as the distribution‐free approximation, we compare the centralized (pooled) system with the decentralized (non‐pooled) system. We investigate the sensitivity of the absolute and relative reduction in costs to the variability of demand and to the number of locations (facilities) being pooled. We show that for the distributions considered, the absolute benefit of risk pooling increases with variability, and the relative benefit stays fairly constant, as long as the coefficient of variation of demand stays in the low range. However, under high‐variability conditions, both measures decrease to zero as the demand variability is increased. We show, through analytical results and computational experiments, that these effects are due to the different operating regimes exhibited by the system under different levels of variability: as the variability is increased, the system switches from the normal operation to the effective and then complete shutdown regimes; the decrease in the benefits of risk pooling is associated with the two latter stages. The centralization allows the system to remain in the normal operation regime under higher levels of variability compared to the decentralized system.     

Shelf Space Management When Demand Depends on the Inventory Level

Two factors that their influence on the demand has been investigated in many papers are (i) the shelf space allocated to a product and to its complement or supplement products and (ii) the instantaneous inventory level seen by customers. Here we analyze the joint shelf space allocation and inventory decisions for multiple items with demand that depends on both factors. The traditional approach to solve inventory models with a state‐dependent demand rate uses a time domain approach. However, this approach often does not lead to closed‐form expressions for the profit rate with both dependencies. We analyze the problem in the inventory domain via level crossing theory. This approach leads to closed‐form expressions for a large set of demand rate functions exhibiting both dependencies. These closed‐form expressions substantially simplify the search for optimal solutions; thus we use them to solve the joint inventory control and shelf space allocation problem. We consider examples with two products to investigate the significance of capturing both demand dependencies. We show that in some settings it is important to capture both dependencies. We consider two heuristics, each one of them ignores one of the two dependencies. Using these heuristics it seems that ignoring the dependency on the shelf space might be less harmful than ignoring the dependency on the inventory level, which, based on computational results, can lead to profit losses of more than 6%. We demonstrate that retailers should use their operational control, e.g., reorder point, to promote higher demand products.     

Sources of Volunteer Motivation: Transformational Leadership and Personal Motives Influence Volunteer Outcomes

We examined the separate influences of volunteers' personal motives and their team leaders' behaviors on volunteer satisfaction and contributions, along with mediating processes suggested by self‐determination theory. Participants were 302 volunteers who worked in teams at various sites through a central agency. As predicted, both personal motives for volunteering and transformational leadership influenced volunteer satisfaction through enhanced work meaningfulness and higher‐quality team relationships. However, motives that predicted volunteer contribution were different from those that predicted satisfaction. Whereas satisfaction was positively associated with motives concerning esteem enhancement and value expression, contribution was positively associated with motives to gain understanding and negatively related to motives pertaining to esteem enhancement and social concerns. Transformational leadership was positively associated with volunteer satisfaction, but not with volunteer contributions. The theoretical ramifications of these findings are discussed, along with practical implications for the recruitment and retention of volunteers.     

The Role Structure of Chinese Managers

The study investigates the role structure of managers in China's Henan province. The results produce a two-facet classification consistent with Shapira and Dunbar's findings for North American managers, yet displaying a number of unique features attributed to the Chinese business environment. The leader's role of the Chinese manager splits into task-related and relationship-oriented activities, and the monitor role is plotted across the informational and decision facets. An addition to this study, the political role is also found across the two facets, providing integration across the various managerial activities. An open system model of the Chinese managerial role is proposed.     

Do Shareholders Really Prefer Their Executives to Maximize the Equity Value? A Newsvendor Case*

In this article, we study how the operational decisions of a firm manager depend on her own incentives, the capital structure, and financial decisions in the context of the newsvendor framework. We establish a relationship between the firm’s cost of raising funds and the riskiness of the inventory decisions of the manager. We consider four types of managers, namely, profit, equity, firm value, and profit‐equity maximizers, and initially assume that they may raise funds to increase the inventory level only by issuing debt. We show that the shareholders are indifferent between the different types of managers when the coefficient of variation (CV) of demand is low. However, this is not the case when the CV of demand is high. Based on the demand and the firm’s specific characteristics such as profitability, leverage, and bankruptcy costs, the shareholders might be better off with the manager whose compensation package is tied to the firm value as opposed to the equity value. We, then, extend our model by allowing the manager to raise the required funds by issuing both debt and equity. For this case we focus on the equity and firm value maximizer managers and show that our earlier results (for the debt only case) still hold subject to the cost of issuing equity. However the benefit of the firm value maximizer manager over the equity maximizer manager for shareholders is considerably less in this case compared to the case where the manager can only issue debt. The Board of Directors can take these factors into consideration when establishing/modifying the right incentive package for the managers. We also incorporate the notion of the asymmetric information to capture its impact on the board of directors’ decision about the managers’ incentive package.