These papers are working drafts of research which often appear in final form in academic journals. The published versions may differ from the working versions provided here.
SSRN Research Paper Series
The Social Science Research Network’s Research Paper Series includes working papers produced by Stanford GSB and the Rock Center.
You may search for authors and topics and download copies of the work there.
Allocation of Access Rights to Rail Network Infrastructure
Access rights on a transmission network possess high degree of inherent differentiation. On a rail network this is further complicated by the need to meet feasibility constraints in scheduling. Common approaches to access pricing focus on…
Discrete Choice Models as Structural Models of Demand: Some Economic Implications of Common Approaches
We derive some theoretical economic properties of standard discrete choice econometric models that we believe are undesirable if the models are to be used as structural models of demand. We show that many standard models have the following…
Is Disinflation Good for the Stock Market?
When countries attempt to stabilize annual inflation rates that are greater than 40 percent, the domestic stock market appreciates by 24 percent on average. The present value of the long-run benefits to shareholders of reducing high inflation…
Measuring Herding and Exaggeration by Equity Analysts and Other Opinion Sellers
Firms and individuals who sell opinions may bias their reports for either behavioral or strategic reasons. This paper proposes a methodology for measuring these biases, particularly whether opinion producers under or over emphasize their private…
Stock Market Liberalizations and the Repricing of Systematic Risk
When countries open their stock markets to foreign investors, firms that become eligible for purchase by foreigners (investible) are repriced according to the difference in the covariance of their returns with the local and world market. An…
Tacit Collusion in Repeated Auctions
This paper considers the question of tacit collusion in repeated auctions with independent private values and with limited public monitoring. McAfee and McMillan show that the extent of collusion is tied to availability of transfers. Monetary…
The Foundations of Imperfect Decision Making
A theory of decision-making is proposed that speaks to Herbert Simon’s methodological critique of economics without resorting to excessive reductionism. Formally, the new theory removes the Contraction axiom of conventional choice theory (which…
Why Do Firms Use Incentives That Have No Incentive Effects?
This paper illustrates why firms might choose to implement stock option plans or other pay instruments that reward “luck.” I consider a model where adjusting compensation contracts is costly (or wages are rigid) and where agents’ outside…
A Dynamic Analysis of the Market for Wide-Bodied Commercial Aircraft
This paper develops a multi-agent dynamic model of the commercial aircraft industry and then uses that model to analyze industry pricing, performance, and optimal industry policy. In the model, firms are differentiated in their products and cost…
Entrepreneurship and the Process of Obtaining Resource Commitments
Most theories of the firm ignore the entrepreneurial process of how the various resources of the firm are combined in the first place. This paper examines the process of how an entrepreneur obtains commitments from multiple resource providers to…
Going Public and the Option Value of Convertible Securities in Venture Capital
This paper considers potential disagreements between an entrepreneur and a venture capitalist about the desirability of taking a company public. Convertible securities are shown to be optimal for a novel reason. In particular, it is shown that…
Green and Competitive? Evidence from the Stock Market
While public benefits of environmentally friendly practices are well understood, there is anecdotal evidence that suggests that firms that follow such practices also receive private benefits. The paper investigates the effect of pollution…
Is Disinflation Good for Growth?
When countries attempt to stabilize annual inflation rates greater than 40 percent, the domestic stock market appreciates by 24 percent on average. Therefore, the long-run growth benefit of reducing high inflation outweighs the short-run cost. In…
Measuring the Dynamic Gains from Trade
This .paper investigates the linkages between trade policy and economic growth in a panel of 57 countries, between 1970 and 1989. We develop a new measure of trade policy openness, based on the policy component of trade shares. This is used in a…
Pollution Prevention as Innovation? Measuring the Long Run Stock Performance
We examine whether pollution prevention actions result in innovation. Since a change in the product or process is not instantaneous, we compute the buy and hold returns for the long run to capture the gains due to innovation. We compare the stock…
Shareholder Interests, Human Capital Investment and Corporate Governance
Corporations simultaneously claim that human capital is increasingly important to their success and that they seek to maximize shareholder value. This paper studies the relationship between these two developments. We show that the pursuit of…
Stages of Diversification
This paper, studies the evolution of sectoral labor concentration in relation to the level of per capita income. We show that various measures of sectoral concentration follow a U-shaped pattern across a wide variety of data sources: countries…
The Behavior of Price Dispersion in a Natural Experiment
We study the behavior of prices in Poland following the big-bang market reforms in 1990, using a large, disaggregated data set. Price differences within and across regions are initially large but fall rapidly in the early stages of transition.…
The Genesis of Venture Capital: Lessons from the German Experience
Why does venture capital work in some countries but not in others? This clinical study of the first German venture capital firm examines the difficulties of creating a venture capital market in a bank-based financial system. The analysis…
Trade Liberalization and Intersectoral Labor Movements
This paper examines the impact of trade liberalization episodes on movements of labor across sectors. The aim is to evaluate the empirical support for two classes of models: those where the effects of trade are mediated by structural change, and…