Social Efficiency of Entry in an Open Economy

We show that cost asymmetry between the domestic and foreign firms is not necessary for the occurrence of insufficient entry in the domestic country. This result provides a rationale for pro-competitive domestic policies even in the absence of cost asymmetries among the domestic and foreign firms. However, if significant demand comes from foreign countries, and the market structures are determined endogenously in the domestic and foreign countries, domestic-entry in an open economy might not be insufficient, implying that foreign competition might not reduce the importance of anti-competitive domestic policies.

More Efficient Shielding for Internal than External Attention? Evidence from Asymmetrical Switch Costs

At present, the process of switching attention between external stimuli and internal representations is not well understood. To address this, Verschooren and colleagues (2019) recently designed a novel paradigm where participants were cued to switch attention between external and internal information on a trial-by-trial basis. The authors observed an asymmetrical switch cost, which was larger when switching towards internal than external material, even though participants performed internal trials faster. In the current study, we sought to establish the cause of this asymmetry by adjudicating between predictions from three theoretical accounts: associative interference, priming, and memory retrieval. After replicating the original asymmetry (Experiment 1), we demonstrate that trial-by-trial carryover of attentional settings is not a necessary precondition (Experiment 2). The results from Experiment 3 indicate that the cost asymmetry can be best explained by an associative interference account, against a memory retrieval one. Together, these results therefor provide evidence in favor of an associative interference account and document that shielding attention for internal representations from external intrusions is more efficient than the other way around. This finding advances our understanding of a core aspect of cognitive flexibility and the relationship between external and internal attention. More research on this question and novel ones raised by it is necessary, however.

Macroeconomic uncertainty and cost stickiness

Cost management is the core issue related to the development of enterprises, and studying enterprise cost behavior will contribute to optimizing enterprise decisions. However, an enterprise is not an independent organization. Instead, it exists and is affected by the macroeconomic environment. So it is conducive for company to apply macroenvironment information to cost management behaviors. This paper studies the cost stickiness based on the perspective of macroeconomic uncertainty, and takes “adjustment cost” and “agency problems” as the internal logic to integrate into the existing interpretation framework of cost stickiness. We analyze SG&A costs for Chinese listed firms over the period 2013 – 2019 after controlling for known economic determinants. The results show a positive relation between the macroeconomic uncertainty and the degree of cost asymmetry. In particular, the macroeconomic uncertainty makes the cost stickiness of human resource cost weaken.