{"title":"Raising Rivals Costs by Customer Diversion: Evidence from Airline Baggage Fees","authors":"John Kwoka, Pinshuo Wang","doi":"10.1080/13571516.2020.1805279","DOIUrl":"https://doi.org/10.1080/13571516.2020.1805279","url":null,"abstract":"Abstract This study examines the effects of airline baggage fees as a method for diverting high cost passengers to rival airlines that do not charge such fees. We show that the latter in turn must raise their fares, thereby weakening their competitive constraint on carriers with fees and permitting the latter actually to raise their fares. Our empirical evidence focuses on routes where legacy carriers with baggage fees compete with Southwest, which has never had such fees. Consistent with the above implications of the model, we find nontrivial cost and price increases for Southwest and corresponding nontrivial fare increases by legacy carriers on routes on which they overlap with Southwest. These results provide support for the theory of \"raising rivals’ costs\", this in airlines, but common in other settings where unbundled pricing shifts customers between firms.","PeriodicalId":45470,"journal":{"name":"International Journal of the Economics of Business","volume":"17 1","pages":"1 - 18"},"PeriodicalIF":1.2,"publicationDate":"2020-08-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87311942","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Trust Relationships in Employment Relationships: the Role of Trust for Firm Profitability","authors":"B. Brandl","doi":"10.1080/13571516.2020.1802213","DOIUrl":"https://doi.org/10.1080/13571516.2020.1802213","url":null,"abstract":"Abstract Trust between actors in firms per se as well as in the employment relationship, i.e. between the representatives of employees and the management, is usually seen in the literature to affect firm performance positively, yet to date there has been no systematic analysis of the effect of different forms of trust, including mutual trust, on firms’ financial performance. In this article we argue that only mutual trust, rather than all forms of trust, is sufficient to systematically constitute an advantage for firms and ultimately materialize in firms’ profitability increases. We test our hypotheses on the basis of a representative and matched employee/employer side data set of firms in the member states of the European Union. Our analysis confirms our hypothesis that only strong mutual trust is able to systematically impact increases in firm profitability positively and weaker forms of trust and unilateral trust do not suffice.","PeriodicalId":45470,"journal":{"name":"International Journal of the Economics of Business","volume":"2012 1","pages":"139 - 161"},"PeriodicalIF":1.2,"publicationDate":"2020-08-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73598892","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Sam A. Williams, C. Pickard, Karligash Glass, Anthony J. Glass
{"title":"Benchmarking Water Retail Cost Efficiency in England and Wales","authors":"Sam A. Williams, C. Pickard, Karligash Glass, Anthony J. Glass","doi":"10.1080/13571516.2020.1790979","DOIUrl":"https://doi.org/10.1080/13571516.2020.1790979","url":null,"abstract":"Abstract Privatised water companies in England and Wales are subject to economic regulation by the industry regulator (Ofwat). Ofwat sets 5-year caps on the prices’ companies can charge their customers. These caps are in part based on the benchmarking of companies’ costs. Ofwat has not previously used econometrics to benchmark domestic retail costs, but it undertook such modelling in its 2019 price review analysis. This is the first journal article to present an efficiency analysis of domestic water retail costs in England and Wales. Our approach is different from Ofwat’s, as we propose two new ways of accounting for differences in the effect on cost of the number of single and dual service customers (water/sewerage-only and water and sewerage). Some companies’ cost efficiencies vary greatly between the two ways. Depending on the approach to price capping, this could possibly have non-negligible implications for companies’ caps.","PeriodicalId":45470,"journal":{"name":"International Journal of the Economics of Business","volume":"42 1","pages":"431 - 467"},"PeriodicalIF":1.2,"publicationDate":"2020-07-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85158008","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Switching Costs in the Brazilian Airline Sector","authors":"Marcelo Resende, D. Amorim, P. O. Valente","doi":"10.1080/13571516.2020.1787746","DOIUrl":"https://doi.org/10.1080/13571516.2020.1787746","url":null,"abstract":"Abstract This paper calculates the switching costs in the context of the Brazilian airline industry by considering an indirect approach, and econometrically evaluates its determinants during the 2005-2017 period. Evidence suggests non-negligible switching costs that display a decreasing trend over time, which is consistent with an increase in the competition in the sector, as also exhibited in other countries. An instrumental variables estimation suggests that variables referring to the number of flights, a frequent flyer program and the entry/presence of competitors play a role in determining the magnitude of switching costs.","PeriodicalId":45470,"journal":{"name":"International Journal of the Economics of Business","volume":"69 1","pages":"321 - 339"},"PeriodicalIF":1.2,"publicationDate":"2020-07-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84335375","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Buyer power of retailers with limited selling capacity","authors":"Ramon Faulí-Oller","doi":"10.1080/13571516.2020.1792226","DOIUrl":"https://doi.org/10.1080/13571516.2020.1792226","url":null,"abstract":"Abstract We have two upstream firms producing each one a different good. Demands of the goods are independent, symmetric and linear. Goods are sold to consumers through retailers. The units of both goods sold by retailers cannot exceed the industry selling capacity that it is distributed symmetrically among retailers. Taking as given the industry selling capacity, when the number of retailers decreases, they become bigger in the sense that their selling capacity increases. Therefore, changing the number of retailers, we can check whether the countervailing power theory, that states that bigger retailers obtain better deals from suppliers, holds in our model. We obtain that the lower the number of retailers, the lower the wholesale prices, only when the industry selling capacity is high.","PeriodicalId":45470,"journal":{"name":"International Journal of the Economics of Business","volume":"16 1","pages":"341 - 355"},"PeriodicalIF":1.2,"publicationDate":"2020-07-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83519570","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Efficiency analysis of social performance – the case of Turkish super league","authors":"Selçuk Özaydın, M. Donduran","doi":"10.1080/13571516.2020.1787786","DOIUrl":"https://doi.org/10.1080/13571516.2020.1787786","url":null,"abstract":"Abstract Undoubtedly, due to its impact on both revenues and the home advantage, social performance is a key factor of success for football clubs. Growing revenues and the government’s eagerness to promote football in Turkey in recent years have created desirable conditions for Turkish clubs. However, research into the impact of social performance success has not received much attention, especially in Turkey, despite Turkey being one of the major leagues in Europe. This study aims to fill this gap in the literature. It does so by investigating social performance using a two-stage stochastic frontier analysis drawing on evidence from the Turkish Super League between the 2012/2013 and 2017/2018 seasons. Results from the first stage illustrate that social efficiency leaders change almost every season. Results from the second stage of research identify which specific factors are diminishing the social technical efficiency for clubs in the Turkish Super League. It emerges that the fundamental source of social inefficiency in Turkey is the Passolig, an identification system implemented in 2014. Furthermore, it transpires that heterogeneity among the clubs’ hometowns is also highly influential on social efficiency. However, even though attendance has managed to recover back to pre-Passolig levels, social efficiency is still lower than the pre-Passolig levels.","PeriodicalId":45470,"journal":{"name":"International Journal of the Economics of Business","volume":"27 1","pages":"391 - 409"},"PeriodicalIF":1.2,"publicationDate":"2020-07-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81416863","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Exploring the Relationship between Risk and Performance in Listed Indian Firms","authors":"R. DasGupta, S. G. Deb","doi":"10.1080/13571516.2020.1767981","DOIUrl":"https://doi.org/10.1080/13571516.2020.1767981","url":null,"abstract":"Abstract This paper analyses the relationship between a firm’s accounting risk and performance for a large sample of listed Indian firms observed over the period 2000–2015. We find evidence that the relationship is not absolute but contingent on the level of firm performance. We show that poorly performing firms below a threshold level of performance exhibit a ‘paradoxical’ or inverse relationship, while the firms above the threshold exhibit a non-linear relationship with a clear point of inflection. We posit that the former observation is due to a risk-seeking behaviour by the poor performers in line with behavioural finance theories while the latter is a result of a mixed-risk-behaviour.","PeriodicalId":45470,"journal":{"name":"International Journal of the Economics of Business","volume":"66 1","pages":"411 - 430"},"PeriodicalIF":1.2,"publicationDate":"2020-05-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90719622","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Foreign Ownership and Labor Demand by Skill in the Tunisian Manufacturing Industry: A Firm-Level Investigation","authors":"M. Zmami, O. Ben-Salha","doi":"10.1080/13571516.2019.1678295","DOIUrl":"https://doi.org/10.1080/13571516.2019.1678295","url":null,"abstract":"Abstract This paper aims to examine the impact of foreign ownership on the employment of different skill groups in Tunisian manufacturing industries. The empirical investigation is based on a rich and unique firm-level dataset covering the period 1997–2007. The estimation of a dynamic labor demand function using the system GMM estimator brings out many interesting findings. First, results indicate that foreign ownership has a positive effect on total employment. Second, when decomposing employment according to skill level, we reveal that the foreign ownership of firms affects positively unskilled labor demand and negatively skilled labor demand. Furthermore, the effects are higher in small and medium-sized enterprises and firms belonging to low technology industries. Findings also suggest no significant differences between short- and long-run effects of foreign ownership on the employment of different skill groups. Finally, the main results of the research hold even when estimating the labor demand functions simultaneously using the three-stage least squares estimator. The policy implications are correspondingly derived.","PeriodicalId":45470,"journal":{"name":"International Journal of the Economics of Business","volume":"34 1","pages":"177 - 201"},"PeriodicalIF":1.2,"publicationDate":"2020-05-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81965675","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Francisco Jareño, Marta Tolentino, M. González, M. Á. Medina
{"title":"Interest rate exposure of European insurers","authors":"Francisco Jareño, Marta Tolentino, M. González, M. Á. Medina","doi":"10.1080/13571516.2019.1681789","DOIUrl":"https://doi.org/10.1080/13571516.2019.1681789","url":null,"abstract":"Abstract This paper focuses on analysing the sensitivity and behaviour of some of the leading insurers currently operating in the Euro area to changes in benchmark interest rates. The methodology used is the Quantile Regression (QR) approach and the period analysed covers from 2003 to 2015 around the recent global financial crisis. The empirical results show that European insurance market returns have a statistically significant sensitivity to interest rate variations and that there are important differences according to the period analysed, being the sensitivity most pronounced in extreme market conditions.","PeriodicalId":45470,"journal":{"name":"International Journal of the Economics of Business","volume":"2016 1","pages":"255 - 268"},"PeriodicalIF":1.2,"publicationDate":"2020-05-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88984898","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Access Regulation and Broadband Deployment: Evidence from a Worldwide Dataset","authors":"Inès Ben Dkhil, Khaïreddine Jebsi","doi":"10.1080/13571516.2019.1684093","DOIUrl":"https://doi.org/10.1080/13571516.2019.1684093","url":null,"abstract":"Abstract This paper explores whether the differences in national regulatory policy practices explain gaps in the fixed broadband uptake across countries worldwide. In doing this, we consider a dataset covering 107 developed and developing countries during 2004–2015. Based on data about regulatory practices gathered from several relevant sources, we compute an index to quantify the degree of regulation in the fixed telecommunication segment. Overall, our findings exhibit clearly an inverted U-shape relationship, meaning that high degrees of regulation harm broadband investment. However, isolating the behavior of the least developing countries from the rest of our worldwide panel, we obtain different results. In fact, access regulation is a relatively recent practice in many developing countries. Moreover, the use of this novel data set has allowed us to investigate the specific impact of each one of these regulatory policies. We argue that most findings are in line with the theoretical predictions.","PeriodicalId":45470,"journal":{"name":"International Journal of the Economics of Business","volume":"40 1","pages":"203 - 253"},"PeriodicalIF":1.2,"publicationDate":"2020-05-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90170037","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}