Industrial organisation

Michael Stolpe, 23 September 2021

To win the critical race between vaccines and mutations, the worldwide Covid-19 vaccination campaign must mobilise economies of scale. The most effective way to do so, this column argues, is to convert the existing Covid-19 Vaccines Global Access initiative into a more generously endowed global fund. Instead of merely obtaining the surplus vaccines of rich countries, and relying on unpredictable donations, the initiative should acquire the most promising vaccine patents and offer free production licenses to every qualified vaccine and generic drug manufacturer in the global South.

Vincent Aussilloux, Jean-Charles Bricongne, Samuel Delpeuch, Margarita Lopez Forero, 21 September 2021

French multinational enterprises have been expanding their activity abroad, including for profit-shifting purposes. These tax planning activities may alter the measurement and our understanding of their real activity. This column uses French micro-data from 1997 to 2015 to show that firm-measured productivity declines in the years following multinationals’ establishment of tax havens. Had these new presences in tax havens not been established, the annual growth of French aggregate labour productivity would have been 0.06% higher, which is tantamount to 9.7% of the observed annual aggregate labour productivity growth. 

Tobias Kretschmer, Sven Werner, 28 August 2021

Recent discussions on how to regulate dominant online platforms revolve around the suitability of applying existing regulatory frameworks. This column contrasts the economic and strategic features of platform business models to those of utility industries, which are often considered structurally similar. It argues that the design of effective regulation for dominant digital platforms should account for platforms’ nature as an ecosystem of independent actors and for their relatively shorter innovation cycles.

Pamela Campa, Lucija Muehlenbachs, 22 July 2021

Every year in the US around 5,000 cases are brought against defendants for violating federal environmental statutes, with defendants given the opportunity to volunteer ‘Supplemental Environmental Projects’ in lieu of a cash penalty. This column uses the history of US federal environmental cases between 1997 and 2017 to examine the implications of such in-kind settlements for firms and communities. The findings suggest that on economic grounds, the use of Supplemental Environmental Projects is beneficial and worth continuing and that, as recommended by the OECD, environmental agencies worldwide could fruitfully use in-kind settlements.

Alex Edmans, Tom Gosling, Dirk Jenter, 15 July 2021

How CEO pay is set has been studied extensively, but most theoretical models do not capture whether real-world CEOs care about, for example, their reputation, fairness, or being appreciated by directors and investors. This column explores this using a survey of over 200 non-executive directors of FTSE All-Share companies and over 150 institutional investors in UK equities. While financial incentives are relevant to motivating CEOs, both CEOs and investors view a CEO’s intrinsic motivation and personal reputation as most important. Fairness matters – CEOs believe it is fair to be recognised for a job well done.

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