Contributions in Merlin

We consider a three-location duopoly model such that (i) firms choose production and innovation locations before (Bertrand) competition takes place and (ii) there are internal and external knowledge spillovers. We show: (1) agglomerations where firms earn negative profits may exist when there are both external and internal knowledge spillovers; (2) greater external spillovers do not necessarily favor agglomeration; (3) decreasing communication costs tend to favor agglomeration; (4) there are exactly two types of agglomeration equilibria: either both firms innovate in the agglomeration, or there is an innovator and an imitator; and (5) if there is a location where both firms produce, then innovation must take place in this location.

There is strong evidence that people exploit their bargaining power in competitive markets but not in bilateral bargaining situations. There is also strong evidence that people exploit free-riding opportunities in voluntary cooperation games. Yet, when they are given the opportunity to punish free riders, stable cooperation is maintained, although punishment is costly for those who punish. This paper asks whether there is a simple common principle that can explain this puzzling evidence. We show that if some people care about equity the puzzles can be resolved. It turns out that the economic environment determines whether the fair types or the selfish types dominate equilibrium behavior

The purpose of this study was to examine crucial predictors of driving frequency. In contrast to traditional psychological environmental research emphasizing primarily personal variables in explaining environmental behavior, the perspective taken in this article is that behavior is generally prevented by a host of constraints. Therefore, this study was aimed at identifying prevalent constraints inhibiting individuals from reducing their driving frequency. By means of questionnaire data collected from a sample of Swiss adults two classes of constraints were examined: (a) Subjective factors that were assumed to affect the preference for proenvironmental behavioral alternatives (sense of responsibility, perceived behavioral barriers); and (b) objective conditions that inhibit the performance of proenvironmental action (socio-demographic variables such as lack of automobile, place of residence, income). Multiple regression analyses indicated that subjective constraints explained a significant amount of variance in behavioral reports, but structural constraints also contributed to explaining variance. Theoretical and applied implications of examining constraints to which people are subjected to and implications for further research are discussed.

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This article provides an analysis of the NOVARTIS mega‐merger in January 1997, leading to the second biggest pharmaceutical company in the world. A concept of analysis to clarify the crucial aspects of such an outstanding strategic event in a comprehensive way is developed. The intra‐organizational evolutionary perspective demonstrates that fundamental patterns of development in a merger can be explained and predicated based on the analysis of the two candidates' previous patterns. This approach provides deep insights not only for academics, but also for managers and consultants designing and leading a mega‐merger in reality.

We model the role various forms of nonrecourse secured debt play in efficiently redeploying assets whose value is state‐specific. Ex ante, an entrepreneur and an asset redeployer make noncontractible state‐specific investments in the primary and next‐best uses of an asset, respectively. The redeployer provides a secured nonrecourse loan equal to the value of the asset in the critical state that separates the good and bad states. In the event of a bad state, this contract averts ex post bargaining over the asset's quasi‐rents on redeployment and leaves the parties' ex ante investments undistorted.

We prove that locally, Walras' law and homogeneity characterize the structure of market excess demand functions when financial markets are incomplete and assets' returns are nominal. The method of proof is substantially different from all existing arguments as the properties of individual demand are also different. We show that this result has important implications and is part of a more general result that excess demand is an essentially arbitrary function not just of prices, but also of the exogenous parameters of the economy as asset returns, preferences, and endowments. Thus locally the equilibrium manifold, relating equilibrium prices to these parameters has also no structure.