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We focus on analysing cost minimising production behaviour in multi-output settings. We distinguish between two approaches for modelling the use of joint inputs. The cooperative approach assumes cost minimisation at the aggregate firm level, while the non-cooperative approach assumes cost minimisation at the level of the individual output division. Our framework extends the existing nonparametric framework for analysing single output production. An empirical application to the English and Welsh drinking water and sewerage sector shows the practical usefulness of our framework. Specifically, we compare the empirical validity of the cooperative and non-cooperative models for describing the observed production behaviour.

Interfirm cooperation and its performance implications are examined in the context of two widely cited theoretical approaches to organizations. Broadly speaking, the resource-based view suggests that firms seek to capitalize on and increase their capabilities and endowments, whereas organizational economics asserts that firms focus on minimizing the costs of organizing. Although these perspectives agree on managers' likely actions in many areas, their predictions diverge when interfirm cooperation is considered. We take a step toward reconciling these differences by positing that firms place resource-based concerns in front of considerations from organizational economics when deciding whether or not to engage in interfirm cooperation. We examined this prediction using data from 94 publicly held restaurant chains. The results support our integrated view, but also suggest that giving primacy to resource concerns detracts from the performance of some firms. We derive several implications of these findings in an effort to guide subsequent inquiry.

In our everyday lives we tend to minimize effort, by using automatic tools, for instance. But we also tend to avoid idleness by engaging in various activities. What happens when minimizing effort and avoiding idleness are concurrent? This article explores the influence of waiting time as compared with a fixed manual task completion on people’s preference for waiting or doing the task. In 2 experiments, participants were asked to choose performing a manual task or waiting while an automatic tool performed the task for them. The time required by the automatic tool to complete the task was manipulated and was equal to or shorter than the time needed for manual completion. Results indicated that the faster the automatic tool (i.e., the shorter the waiting time) the more participants used it instead of doing the task manually. However, participants favored the waiting option only when the waiting time was less than half as long as doing the task manually. These results suggest that people prefer to avoid idleness rather than to minimize effort.

This paper presents a method to identify the set of routes and their flows in a user-equilibrium traffic assignment solution. We present a general consistency condition that is satisfied by any set of minimum-cost routes, and show how it can be used in choosing a set of routes that is likely to be similar to the set of user-equilibrium routes. The proposed consistency condition is also essential for finding the entropy-maximizing route flows solution, which may be regarded as the most likely one. An efficient method for finding the entropy-maximizing solution is presented. Numerical results on several networks, including one of large scale, demonstrate the effectiveness of the proposed method. In most cases the method achieves a duality gap of practically zero in a short computation time.

Many scholars have emphasized the importance of subjective performance evaluations in employment relationships to provide employees with effort incentives. This article examines when delegating subjective appraisals to managers is optimal. Delegation facilitates more accurate performance evaluations but can also lead to collusion. To prevent collusive behavior, I show that firms need to reduce effort incentives for employees and leave managers with economic rents through higher compensations. Despite these costs of preventing collusion, I find that delegation can be optimal.

In this paper, we will present a new finite horizon repair/replacement decision model and derive the structure of the optimal policy for components that have a failure intensity that is a non-decreasing function of the number of times the component has been repaired, and independent of the component's age. Furthermore, the component has physical restrictions on the number of times it can be repaired, after which the only feasible decision is to replace the component. The fundamentals of this new decision model are based on the outcomes of several case studies done by the authors. Besides presenting the model and showing the structure of the optimal policy, the model will be applied to a real industry data set, and its results discussed.

In this paper, we present a new strongly polynomial time algorithm for the minimum cost flow problem, based on a refinement of the Edmonds-Karp scaling technique. Our algorithm solves the uncapacitated minimum cost flow problem as a sequence of O ( n log n ) shortest path problems on networks with n nodes and m arcs and runs in O ( n log n ( m + n log n )) time. Using a standard transformation, this approach yields an O ( m log n ( m + n log n )) algorithm for the capacitated minimum cost flow problem. This algorithm improves the best previous strongly polynomial time algorithm, due to Z. Galil and E. Tardos, by a factor of n 2 / m . Our algorithm for the capacitated minimum cost flow problem is even more efficient if the number of arcs with finite upper bounds, say m ', is much less than m . In this case, the running time of the algorithm is O (( m ' + n ) log n ( m + n log n )).

Zahavi's handicap principle, originally proposed as an explanation for sexual selection of elaborate male traits, suggests that a sufficient cost to dishonest signals can outweigh the rewards of deception and allow individuals to communicate honestly. Maynard Smith (1991) and Johnstone & Grafen (1992) introduce the Sir Philip Sidney game in order to extend the handicap principle to interactions among related individuals, and to demonstrate that stable costly signalling systems can exist among relatives. In this paper we demonstrate that despite the benefits associated with honest information transfer, the costs incurred in a stable costly signalling system may leave all participants worse off than they would be in a system with no signalling at all. In both the discrete and continuous forms of the Sir Philip Sidney game, there exist conditions under which costly signalling among relatives, while stable, is so costly that it is disadvantageous compared with no signalling at all. We determine the factors which dictate signal cost and signal benefit in a generalized version of this game, and explain how signal cost can exceed signal value. Such results raise concerns about the evolutionary pathways which could have led to the existence of signalling equilibria in nature. The paper stresses the importance of comparing signalling equilibria with other possible strategies, before drawing conclusions regarding the optimality of signalling.

Rewards for better quality, penalties for poorer quality, and the type of inspection policy are among the most common quality-related provisions of supply chain contracts. In this paper, we examine the effect of rewards, penalities, and inspection policies on the behaviour of an expected cost minimizing supplier. We assume that the supplier selects a batch size and target quality level in order to meet a buyer's deterministic demand. We show that the reward and/or penalty that motivates a supplier to deliver the buyer's target quality depends upon the inspection policy. We also show that, when sampling inspection is used, penalties and rewards are substitutes for one another in motivating the supplier and that there exists a unique reward/penalty combination at which the buyer's expected cost of quality is zero.

This paper studies the aggregate substitution and expansion effects triggered by changes in input prices in a context where firms supply a homogeneous commodity and compete in quantities à la Cournot. We derive a sufficient condition for the existence of a Cournot equilibrium and show that this condition also ensures that the Le Chatelier-Samuelson principle is satisfied in the aggregate at the Cournot equilibrium, although it may not be satisfied at the firm level. JEL: D21, D43 / KEY WORDS: Aggregation, Returns to Scale, Market Power, Markup, Own-Price Elasticity