Sourcing decision under interconnected risks: an application of mean–variance preferences approach

Supply chains are customarily associated with multiple interconnected risks originated from supply side, demand side, or from the unanticipated background uncertainties faced by a firm. Also, effective functioning of supply chain hinges on sourcing decisions of inputs (raw materials). Therefore, there is a striking need to analyse the risk preference of the decision maker while going for optimal sourcing decision under varying degree of interconnected supply chain risks. This study addresses this issue by analysing the comparative static effects under interconnected supply chain risks for a risk averse decision-maker, manufacturing and selling products in a regulated market under perfect competition. The decision-maker faces not only supply-side risk (due to random input material prices) but also interconnected risks arising out of background risk (setup costs risk) and demand-side risk (output prices risk). With preferences defined over the mean and standard deviation of the uncertain final profit, this study illustrates the effects of the changes in the pairwise correlations between the three above mentioned risks on the optimum input choice of the manufacturer. To contextualise this study, an India-based generic drug manufacturer cum seller has been considered as a case in the parametric example of our model. Adaptation of the mean–variance framework helps obtaining all the results in terms of the relative trade-off between risk and return, with simple yet intuitive interpretations.

Analisis Struktur Pasar Sayuran di Desa Kanreapia Kecamatan Tinggimoncong Kabupaten Gowa Provinsi Sulawesi Selatan

Potensi tanaman hortikultura khususnya sayuran yang ada di Kecamatan Tinggimoncong cukup besar bahkan beberapa jenis sayuran seperti kubis, petsai, wortel, bawang daun dan kentang, selain dipasarkan dalam wilayah kabupaten juga dipasarkan sampai ibukota propinsi bahkan di antar pulaukan ke Kalimantan namun demikian sistem pemasarannya masih bersifat tradisional yang berimplikasi pada pendapatan petani sebagai produsen tidak optimal. Penelitian ini bertujuan mengkaji stuktur pasar, saluran distribusi dan margin pemasaran produk usahatani sayur-sayuran yang berada di Desa Karenapia, Kecamatan Tinggimoncong, Kabupaten Gowa, Sulawesi Selatan. Dilaksanakan pada bulan April hingga Juni 2019, dengan menggunakan pendekatan deskriptif kuantitatif. Hasil penelitian menunjukan bahwa Struktur pasar sayuran yang terbentuk di desa Kanreapia mengarah pada pasar oligopsoni. Struktur pasar di tingkat kabupaten/kota, lebih memgarah pada pasar persaingan sempurna dan diferensiasi. petani sebagai produsen tidak memiliki sarana dan perlakuan pascapanen (standarisasi melalui grading), lemahnya informasi tentang pasar sehingga peranan petani dalam memanfaatkan peluang pasar sangat kecil, skala usaha yang relatif kecil dan usaha tani yang tidak didasarkan atas permintaan pasar, menyebabkan posisi tawar petani sangat lemah, hal ini memungkinkan kehadiran pedagang perantara yang kemudian lebih dominan dalam penentuan harga jual di tingkat petani. Bagian yang diterima petani dari harga yang dibayarkan konsumen untuk beberapa jenis sayuran, rata-rata lebih kecil dibandingkan yang diterima oleh pedagang perantara sehingga sistem pemasaran yang terjadi dinilai kurang efisien bagi petani. The potential of horticultural crops, especially vegetables in the District of Tinggimoncong is quite considerable. Some types of vegetables such as cabbage, Chinese cabbage, carrots, leeks and potatoes, besides being marketed in the Regency Area, are also marketed to the provincial capital even inter-island to Kalimantan. The marketing system, however, is still traditional, and that makes the income of the farmers as the producers is not optimal. This study aimed to examine the market structures, distribution channels and marketing margins of the vegetable farming products located in Kanreapia village Tinggimoncong District Gowa Regency South Sulawesi. Using a quantitative descriptive approach, it was carried out from April to June 2019. The results showed that the structure of the vegetable market formed in Kanreapia village led to an oligopsony market. The market structure at the Regency/Municipal level was more likely to lead to a perfect competition and differentiation market. Because the farmers as the producers did not have post-harvest treatment and facilities (standardization through grading), and were weak in terms of market information, the role of the farmers in taking the advantages of market opportunities was very small. The relatively small business scales and non-market-demand farming have caused the farmers’ bargaining position very weak, allowing the presence of intermediary traders who in turn are more dominant in determining the selling prices at the farmer level. For several types of vegetables, the share received by the farmers from the price paid by the consumers is, on average, smaller than that received by the intermediary traders. Hence, the marketing system that occurs is considered less efficient for farmers.

Pasar Persaingan Sempurna

Struktur pasar dibedakan berdasarkan banyaknya penjual dan pembeli. Secara mudah dikatakan pasar yang terdiri dari banyak penjual dengan barang yang relatif homogen disebut pasar bersaing sempurna (perfect competition). Pasar persaingan sempurna adalah suatu pasar di mana jumlah penjual dan pembeli (konsumen) sangat banyak dan produk atau barang yang ditawarkan atau dijual sejenis atauserupa. Pada pasar ini kekuatan permintaan dan kekuatan penawaran dapat bergerak secara leluasa. Ada pun harga yang terbentuk benar-benar mencerminkan keinginan produsen dankonsumen. Permintaan mencerminkan keinginan konsumen, sementara penawaran mencerminkan keinginan produsen atau penjual. Bentuk pasar persaingan murni terdapat terutama dalam bidang produksi dan perdagangan hasil-hasil pertanian seperti beras, terigu,kopra, dan minyak kelapa. Bentuk pasar ini terdapat pula perdagangankecil danpenyelenggaraan jasa-jasa yang tidak memerlukan keahlian istimewa (pertukangan,kerajinan ).

Duty to Read vs Duty to Disclose Fine Print. Does the Market Structure Matter?

Firms use standard contracts and possibly include unfavorable fine print which consumers may read at some positive cost. We propose a comparison between a monopoly and a perfect competition market under (1) an unregulated legal regime (duty to read) and (2) a regulation that mandates clause disclosure (duty to disclose). If consumers bear the duty to read contract terms, regardless of market structure, sellers disclose in equilibrium only if it is cheaper than reading for consumers. Conversely, if sellers bear the duty to disclose contract terms, then such regulation is never welfare improving in either market; it may turn out to be consumer protective only if there are several sellers, whereas it is uneffective on this regard in a monopoly.

Sherman Act 1890: Modernization and Impact on Markets

The major purpose of the Sherman Act was to prevent mergers from forming monopolies. It ensures consumers are protected from price discrimination, and there is free competition. Several economists, classical economists, neoclassical economists, Chicago school and Harvard school, pointed out several antitrust laws. Classical economists led by Smith argued that monopolists set prices at higher prices and raise their charges higher through understocking the markets hence corporations and mergers should be prevented. Neoclassical economists developed a model which assumes that there are no barriers to entry whereby there is free entry to the market. Harvard school also advocated for free competition. Either, the Chicago school was against the idea of free competition and proposed some acts from the antitrust laws to be removed. However, with advancements in technology, the Sherman Act has become outdated and some languages used are held, making it a challenge to interpret in courts. There is a need for the antitrust laws to be reformed to fit the changing technology. Bills should be proposed to make improvements to the acts. For example, Klobuchar Amy, in April 2021, proposed a bill seeking to reform antitrust laws to better perfect competition in the American economy.

Inter-market Variability of Smallholder Beef Cattle Farming in East Java Indonesia

Indonesia has failed to achieve meat self-sufficiency; meanwhile, East Java is among the centers of beef cattle with a relatively high contribution in terms of GDP and employment. Therefore, this study aims to identify and analyze the market structure of the beef cattle commodity chain by considering the concentration ratio, Gini Index, as well as barriers to exit and entry. The study was conducted in Malang Regency and Sapudi Island, with 164 respondents, which consisted of calf suppliers, farmers, traders, and slaughterhouses. Furthermore, the analytical tools used include descriptive, concentration ratio, Gini Coefficient, and analysis of barriers to entry and exit. Based on the results, the market structures in the beef cattle commodity chain in terms of its input market was perfect competition, while the intermediate and output market was oligopoly. These results were confirmed by the concentration ratios of calf suppliers and farmers, which were lower than the ratios of traders and slaughterhouses. Although the market structures were different, their Gini Coefficients are almost similar because a value of 0.2 showed an equitable distribution. Additionally, the barriers to entry into the market were high investment with a large number of import and market problems. Meanwhile, the barriers to exit the market were a large number of potential demands, high investment, and a source of income.

FIRMS’ EMPLOYMENT DYNAMICS AND THE STATE OF THE LABOR MARKET

According to search and matching theory, a greater availability of unemployed workers should make it easier for a firm to fill a vacancy, but more vacancies at other firms should make recruitment more difficult. Simulating a theoretical model of a firm facing perfect competition in the product market and no convex adjustment costs (standard assumptions in the search and matching literature), I find that shocks to vacancies and unemployment lead to economically significant employment responses. Simulating a more realistic model with imperfect competition in the product market and convex adjustment costs, I find small employment effects of shocks to vacancies and unemployment. In particular, shocks to the number of unemployed seem to be unimportant. Estimating an employment equation on a panel of Swedish firms, I find that neither the number of unemployed workers nor the number of vacancies in the local labor market is important for firms’ employment decisions.

The Effect of Technological Change and Regulation on the Evolution of the New Zealand Telecommunications Market

<p><b>The absence of industry specific regulation of access to the incumbent'stelecommunications network in New Zealand for an extended period, between1989 and 2001, is unique compared with other countries with developedtelecommunications markets that were opened to competitive entry. This featureof the New Zealand market provides an opportunity to compare the conduct andperformance of antitrust regulation with industry specific regulation introducedin 2001.</b></p> <p>Of particular interest is the place of the concepts of natural monopoly andperfect competition in the regulation of a dynamic market. This thesisestablishes the characteristics that contribute to dynamic supply and demandconditions in the telecommunications market including network effects,discontinuity in demand due to participation, ongoing technological progress ofhardware, sunk costs of software development, and the irreversible investmentof augmenting capacity to meet expected growth in demand. The economicliterature on conjectural variations indicates that under such conditions theconcepts of natural monopoly and perfect competition do not explaincompetitive conduct due to an unstable market equilibrium. The implication isthat forming a reasonable view of competitive conduct is limited to the presentperiod of time.</p> <p>It is shown that decisions made under antitrust regulation are limited to theparticular context of disputed competitive conduct, and these decisions do notspeculate on future competitive conduct. In contrast, industry specific regulationhas formed a sequence of views of competitive conduct, looking forward, that isbased on concepts of natural monopoly and perfect competition. It is observedthat with time, these views of competitive conduct have evolved with thechanging market conditions. If regulatory actions evolve with a changing view ofcompetitive conduct they risk reducing dynamic efficiency.</p>