DEALERSHIP COMPETITION IN THE U.S. AUTOMOBILE INDUSTRY.Lall B. Ramrattan [*] Abstract This paper develops a model of dealership rivalry Rivalry Robbery (See THIEVERY.) Rudeness (See COARSENESS.) Brom Bones and Ichabod Crane bully and show-off compete for Katrina’s hand. [Am. Lit. for the U.S. auto industry in line with the research program of Joe Bain n. 1. A bath; a bagnio. . In Bain's research, the literature depicts the auto. industry as a differentiated oligopoly oligopoly: see monopoly. oligopoly Market situation in which producers are so few that the actions of each of them have an impact on price and on competitors. Each producer must consider the effect of a price change on the others. with non-price competition Non-price competition is a marketing strategy "in which one firm tries to distinguish its product or service from competing products on the basis of attributes like design and workmanship" (McConnell-Brue, 2002, p. 437-438). and price collusion An agreement between two or more people to defraud a person of his or her rights or to obtain something that is prohibited by law. A secret arrangement wherein two or more people whose legal interests seemingly conflict conspire to commit Fraud . It has established advertising and R&D rivalry successfully, but has focused little attention to dealership competition. Because Bain has given a dominant role to dealership competition, this paper addresses the dealership rivalry problem. We found that a competitive model allowing a firm to react to a rival's past levels of advertising, R&D outlays Outlays Payments on obligations in the form of cash, checks, the issuance of bonds or notes, or the maturing of interest coupons. , and the number of dealers, represents the firms' non-price competitive behavior well for the 1970-1996 period. The hypotheses we used have captured the joint effects of advertising, R&D, and dealerships, when explicit specifications for the financial constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. facing the firms are accounted for. We are able to statistically validate To prove something to be sound or logical. Also to certify conformance to a standard. Contrast with "verify," which means to prove something to be correct. For example, data entry validity checking determines whether the data make sense (numbers fall within a range, numeric data the hypothesis that U.S. firms do compete in dealership systems, as J oe Bain has predicted, within the differentiated oligopoly market structure. The results also allow some inferences regarding the sequential nature of non-price competition among the firms. 1. Introduction This paper is a sequel to several articles in this journal (Ramrattan [1991]; Ramrattan [1994]; Ramrattan [1998]) that apply Joe Bain's hypothesis to the U.S. auto industry. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Bain, auto firms engage in dealership rivalry partly to maintain the product preferences of buyers, partly to sell a substantial part of their products through retail dealerships, and partly to promote sales, specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. maintenance, repair service, and easy access to replacement parts (Bain [1956], p. 300). This study analyzes and statistically explains how auto firms compete in their levels of dealerships. Such competition can take place over exclusive or dual franchises, with the special case of the latter entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: intercorporate duals. The method of dual dealership suggests that dealer rivalry among firms may not fall under the traditional leader-follower model found with advertising and R&D rivalry. Broadly speaking Adv. 1. broadly speaking - without regard to specific details or exceptions; "he interprets the law broadly" broadly, generally, loosely , we find that the proliferation proliferation /pro·lif·er·a·tion/ (pro-lif?er-a´shun) the reproduction or multiplication of similar forms, especially of cells.prolif´erativeprolif´erous pro·lif·er·a·tion n. of products has encouraged nonexclusive dealerships, (Dhebar, Neslin, and Quelch [1987], p. 338) while intercorporate duals are located mostly in rural areas where dealers tend to spread their overhead. (Bresnahan and Reiss REISS Research, Exchange and Impact for System Support [1985]) The domestic auto firms let their dealers carry practically all their inventory, except cars in transit, (Blanchard Blanchard may refer to: People
See Wilcox (surname) Other
(mathematics) symmetric - 1. power in increasing the number of their dealers (General Motors Corporation [1968], p. 82, and General Motors Corporation [1974], pp. 84-85). For example, foreign firms, such as Toyota Toyota (toi-ō`tə, Jap. tōyō`tä), city (1990 pop. 332,336), Aichi prefecture, central Honshu, Japan. It is a major industrial center dominated by the Toyota Motor Company, which produces passenger vehicles and auto parts there. and Volkswagen “VW” redirects here. For the airline using IATA designator VW, see Aeromar. Volkswagen AG (ISIN: DE0007664005), or VW, is an automobile manufacturer based in Wolfsburg, Germany. , have been known to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the dual nature of franchises, selling their brands through domestic dealers that have been established over the years. Comparable time-series data for the foreign firms are not available to allow the study of non-price rivalry between domestic and foreign firms. In the case of price collusion among domestic firms, one study was able to source disruptive disruptive /dis·rup·tive/ (-tiv) 1. bursting apart; rending. 2. causing confusion or disorder. price behavior to the influence of foreign competition (Ramrattan [1991], pp. 63-65). However, the influence of foreign firms in that study was limited to three specific situations, viz viz - A visual language for specification and programming. ["viz: A Visual Language Based on Functions", C.M. Holt, 1990 IEEE Workshop on Visual Langs, Oct 1990, pp.221-226]. ., a cross-section cross section also cross-sec·tion n. 1. a. A section formed by a plane cutting through an object, usually at right angles to an axis. b. A piece so cut or a graphic representation of such a piece. 2. point of view, anomalous a·nom·a·lous adj. 1. Deviating from the normal or common order, form, or rule. 2. Equivocal, as in classification or nature. behavior over only two years--1983 and 1986, and the disruptive influence of foreign competition on the collusive col·lu·sive adj. Acting in secret to achieve a fraudulent, illegal, or deceitful goal. col·lu  sive·ly adv. price behavior of domestic firms. The
non-price dealership environment in this study does not display such
anomalous behavior among the domestic firms. This might be because a
sub-market of American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of buyers remains loyal to domestic brands, while
foreign competition continues to disrupt the pricing policies of
domestic firms.
The logical structure of dealership competition has taken the form of many "if-then" statements. If a firm's cashflow and pricing strategies There are many ways in which the price of a product can be determined. The following are the foremost strategies that businesses are likely to use. Competition-based pricing Setting the price based upon prices of the similar competitor products. are successful, then it may want to strengthen competition in the areas of R&D, Advertising, and Dealership rivalry. If its pricing strategy yields an optimal outcome or even prevents price wars, then it may seek to maximize the return from its R&D endeavor in the areas of basic research, new model year design, or the diffusion diffusion, in chemistry, the spontaneous migration of substances from regions where their concentration is high to regions where their concentration is low. Diffusion is important in many life processes. of innovation. If its sequence of price and R&D strategies are working successfully, then it will look to Advertising outlays and dealership systems to sell its product. The final outcome will be optimal because a firm will most likely follow optimal policies at each stage regarding decisions on price collusion, reaction functions for advertising, research and development, and dealership franchise. In such a dynamic scenario, a firm will not only follow a stabilizing stabilizing, v to hold a limb motionless in order to ground its energy; a standard isometric resistance technique, it releases tension and lengthens muscle fibers. policy by varying its stock of dealers in a smooth fashion, or a destabilizing p olicy by synchronizing synchronizing, n a technique that a therapist uses to coordinate his or her breath with that of the client; builds trust and establishes relationship. desired and actual stock of dealers, but can react to its rivals' past level of franchise holdings, as well. The empirical section below specifies a single equation model to explain such a dealership reaction. We will also examine that equation within a system of equations model, which was validated val·i·date tr.v. val·i·dat·ed, val·i·dat·ing, val·i·dates 1. To declare or make legally valid. 2. To mark with an indication of official sanction. 3. in the literature. 2. Specification We have some a priori a priori In epistemology, knowledge that is independent of all particular experiences, as opposed to a posteriori (or empirical) knowledge, which derives from experience. information about relationships among variables and about the magnitude and signs of parameters to help our specification of dealership rivalry. Bain has identified the volume of sales as an important determinant determinant, a polynomial expression that is inherent in the entries of a square matrix. The size n of the square matrix, as determined from the number of entries in any row or column, is called the order of the determinant. of the number and geographical density of dealer-service representatives of a manufacturer. Sales are dependent on the number of dealers with either exclusive or dual franchises. Regarding price, we will adopt Bain's collusive prediction as validated in a recent study (Ramrattan [1991]) and also in some subtle ways in the broader literature. For instance, Bresnahan and Reiss [1985] have emphasized the traditional idea that sales are also dependent on price formation, which is developed within a market power struggle between manufacturers and dealers, who both determine prices. From the psychological standpoint The Standpoint is a newspaper published in the British Virgin Islands. It was originally published under the name Pennysaver, largely as a shopping-coupon promotional newspaper, but since emerged as one of the most influential sources of journalism in the , we repeat the brand loyalty argument that a high level of product differentiation Product Differentiation A source of competitive advantage that depends on producing some item that is regarded to have unique and valuable characteristics. , which can be enhanced by non-price competition and territorial restraints, may sustain a high price without allowing buyers to switch to other brands. On the structural end, Crandall Cran´dall n. 1. (Stonecutting) A kind of hammer having a head formed of a group of pointed steel bars, used for dressing ashlar, etc. ([1968], p. 222) has pointed out that the vertical integrated nature of the auto market may allow sufficient consumer surplus to be extracted from the parts market to deform prices to a low level represented by incremental costs Costs which are additional costs to the Service appropriations that would not have been incurred absent support of the contingency operation. See also financial management. . He suggested a value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: measure of price level, defined as the sum of payroll, net income before tax, depreciation, and interest divided by sales (Crandall [1968], p. 214). Regarding advertising, we find arguments for positive reactions among firms at both the manufacturer and dealer levels. Simon [1970], p. 38 has argued that "if advertising 'presells' the customer there is less room for selling-promotion by retailers." One implication of this statement is that rivalry in advertising is anchored at the firm level, as corroborated cor·rob·o·rate tr.v. cor·rob·o·rat·ed, cor·rob·o·rat·ing, cor·rob·o·rates To strengthen or support with other evidence; make more certain. See Synonyms at confirm. in two previous studies (Ramrattan [1986] and Ramrattan [1994]). Another implication is that even when retailers advertise, either because they have unadvertised un·ad·ver·tised adj. Not having been advertised to the public: unadvertised sale merchandise. brands, excess inventory, or dual brands, rival dealers may not react, particularly those in the immediate neighborhood. The reasons cited are that dealers' territories are fairly well-defined well-de·fined adj. 1. Having definite and distinct lines or features: a well-defined silhouette. 2. and large, that collusion among dealers may take place, or that one dealer's advertising may sufficiently increase traffic in the neighborhood so as to minimize or cause no retaliation RETALIATION. The act by which a nation or individual treats another in the same manner that the latter has treated them. For example, if a nation should lay a very heavy tariff on American goods, the United States would be justified in return in laying heavy duties on the manufactures and (Dhebar, Neslin, and Quelch ([1987], p. 341). On the R&D end, a recent study found that financial variables modeled in a simultaneous equation framework to account for feedbacks, is necessary to bring out significant relationships. The most significant single equation R&D specification is of the Grabowski Grabowski is the sirname of the following people
n. 1. A baker; originally, a female baker. [1973] type. But its performance in the auto industry needed enhancement to account for the background financial relationship of the firm. We found that the best method and the one adopted in this paper was obtained from embedding 1. (mathematics) embedding - One instance of some mathematical object contained with in another instance, e.g. a group which is a subgroup. 2. (theory) embedding - (domain theory) A complete partial order F in [X -> Y] is an embedding if the single equation model into the Dhrymes and Kurtz system of equation model for the firm. (Ramrattan [1998]) We find the above background information necessary and sufficient to specify a set of equations in order to test the dealership hypothesis. These equations are grouped below, followed by a list of the variables and discussions of their estimation estimation In mathematics, use of a function or formula to derive a solution or make a prediction. Unlike approximation, it has precise connotations. In statistics, for example, it connotes the careful selection and testing of a function called an estimator. . [LnNF.sub.i,t] = Ln[tau] + v[LnNF.sub.t-1,j] + [phi][LnP.sub.t-1,i] + [varphi]LnVC (1) [LnA.sub.i,t] = Ln[alpha] + [beta][LnA.sub.t-1,j] + [gamma][LnP.sub.t-1,i] + [lambda]Opec (2) Div/[S.sub.i,t] = [a.sub.0] + [a.sub.1]P/[K.sub.i,t] + [a.sub.2]N/[K.sub.i,t] + [a.sub.3]Inv/[S.sub.i,t] + [a.sub.4]F/[S.sub.i,t] (3) Inv/[S.sub.i,t] = [b.sub.0] + [b.sub.1][(P/K P/K Printer/Keyboard ).sub.i,t-1] + [b.sub.2]N/[K.sub.i,t] + [b.sub.3][[S.sup.*].sub.i] + [b.sub.4]Div/[S.sub.i,j] + [b.sub.5]F/[S.sub.i,t] (4) F/[S.sub.i,t] = [g.sub.0] + [g.sub.1]LTD/[K-LTD.sub.i,t] + [g.sub.2][r.sub.i,t] + [g.sub.3]Dep/[K.sub.i,t] + [g.sub.4]NI/[K.sub.i,t] + [g.sub.5]Div/[S.sub.i,t] + [g.sub.6]Inv/[S.sub.i,t] (5) [delta][R.sub.i,t] = [c.sub.1][delta][D.sub.i,t] + [c.sub.2][delta][R.sub.j,t-1] + [c.sub.3][delta][P.sub.i,t] + [c.sub.4][delta][V.sub.i,t] + [c.sub.5][delta][R.sub.i,t-1] (6) [Inv.sub.i,t] [equivalent] [F.sub.i,t] + [NI.sub.i,t] - [Div.sub.i,t] - [R.sub.i,t] - [A.sub.i,t] + [Dep.sub.i,t] (7) Where: NF = Net Franchise. VC = Index of Vertical Integration. A = Advertising Expenditure. P = Cashflow (NI + Depreciation). NI = Net Income. i,j = ith and jth firm. Coefficients = [alpha], [beta], [gamma], [lambda], [tau], [upsilon up·si·lon or yp·si·lon n. Symbol  The 20th letter of the Greek alphabet. ], [phi], [varphi], a, b, c, g are estimates.
t = Time. Opec = Dummy Sham; make-believe; pretended; imitation. Person who serves in place of another, or who serves until the proper person is named or available to take his place (e.g., dummy corporate directors; dummy owners of real estate). (Zero for 1970-74, one otherwise). [delta] = Change. [delta][D.sub.i,t] = Cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. Dummy: one when both sales and cashflow fall and zero otherwise. Ln = [log.sub.e] Inv = Investment in Plant and Equipment. Div = Common Stock Dividend Disbursements. S = Sales. [S.sup.*] = Capacity Accelerator accelerator: see particle accelerator. (1) A key combination such as Alt-G or Ctrl-Shift H that is used to activate a task. (2) An incubator that expects to develop the company considerably faster than normal. See incubator. = ([Sales.sub.t], - [Sales.sub.t-3])/[Sales.sub.t-3]. K = Total Invested Capital. N = Short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. position: Excess of inventories, cash, short-term securities, and accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying over accounts payable and other short term liabilities. V = Firm's outstanding debt and money value of common and preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. . R = A firm's R&D outlays. F = External Bond Financing: First Difference of LTD LTD 1 Laron-type dwarfism 2 Leukotriene D 3 Long-term depression, see there 4. Long-term disability . LTD = Long-Term Debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. outstanding. r = An interest rate appropriate to LTD. Equation 1 is our specification for rivalry in net franchise dealership. We expect a firm to react to its rival's past level of dealers in a Cournot fashion, given its cashflow and its degree of vertical integration. The first two variables are standard in the advertising and R&D specifications for rivalrous ri·val·rous adj. Characterized by or given to rivalry or competition. Adj. 1. rivalrous - eager to surpass others emulous behavior. The latter variable captures a firm's market power in sequential stages of production and distribution, where it can discriminate dis·crim·i·nate v. dis·crim·i·nat·ed, dis·crim·i·nat·ing, dis·crim·i·nates v.intr. 1. a. between price and non-price weapons (Blair Blair , Anthony Charles Lynton Known as "Tony" Born 1953. British lawyer, politician, and Labour Party leader who was elected prime minister in 1997. [1972], pp. 26-27). Also, a firm may want to be vertically integrated to allow for efficient use of any excess capacity of plants and equipment (Menge v. i. 1. To mix. [ imp. os> p. p. os> Equations 2-6 are adopted from Ramrattan [1998], where they demonstrated significant rivalry between General Motors, Ford and Chrysler Chrys·ler , Walter Percy 1875-1940. American automobile manufacturer who founded the Chrysler Corporation (1925). in the areas of Advertising and R&D. Financial equations 3, 4, and 5 were specified by Dhrymes and Kurtz [1974], [1967], and the R&D equation 6 by Grabowski and Baxter [1973]. Advertising equation 2 is a specification for Bain's hypothesis that was corroborated in two studies (Ramrattan [1986], [1994]). Equation 7 is an identity for the firm's budget constraint A Budget Constraint represents the combinations of goods and services that a consumer can purchase given current prices and his income. Consumer theory uses the concepts of a budget constraint and a preference ordering to analyze consumer choices. . The data to test these specifications are taken from various sources. The observation period is 1970-1996. The sources for Advertising, R&D, and the financial variables are the same as listed in Ramrattan's study [1998]. The Advertising variable is from Advertising Age's Leading National Advertisers. S&P's Compustat '''Standard & Poor's Compustat® is a database of financial, statistical and market information on active and inactive companies throughout the world. Compustat® data has a reputation for extensive coverage, standardization, expertise and timeliness. tapes, Moody's Moody's Corporation (NYSE: MCO) is the holding company for Moody's Investors Service which performs financial research and analysis on commercial and government entities. The company also ranks the credit-worthiness of borrowers using a standardized ratings scale. Industrial Manual, and firms' Annual Reports are the sources for the firms' financial variables. The R&D data in particular is from the firms' 10K reports. The vertical integration variable is defined as in Crandall [1968]. Firms' payroll data is taken from their Annual Reports. Moody's Industrial Manual is another reliable source, but it did not report payroll data for Chrysler from 1975 onwards on·ward adj. Moving or tending forward. adv. also on·wards In a direction or toward a position that is ahead in space or time; forward. Adv. 1. . The dealership data is from various issues of the Automotive News' Market Data Book. 3. Results Like Dhrymes and Kurtz [1967], we got our best results using a 3-stage-least-square estimation technique. The set of instrumental variables we used excludes the dependent variables. The results are represented in Tables 1 to 3R. Table 1 shows a significant response by the Ford Corporation to a change in the dealership levels of General Motors. The index of vertical integration has a small negative but statistically significant influence on net dealership formation. It suggests that as the firm's degree of integration improves, it may need fewer dealer outlets. The cashflow coefficient coefficient /co·ef·fi·cient/ (ko?ah-fish´int) 1. an expression of the change or effect produced by variation in certain factors, or of the ratio between two different quantities. 2. is at about the same level in the dealership model as in the R&D model, approximately 0.04 vs. 0.06, respectively. It is significant at the 99% confidence level across advertising, R&D, and net franchise. The dealership coefficient is highly significant. Its high level indicates a corroboration of Bain's hypothesis that dealership rivalry is strong. The estimated dealership coefficient, which is close to one, shows that Ford re acts almost perfectly to General Motors' previous level of Net Franchise, implying a head-to-head head-to-head adv. & adj. 1. In direct confrontation or conflict at close quarters: The two brothers went at it head-to-head. It was a head-to-head contest all the way. 2. competition. Table 1R shows General Motors' response to Ford, testing for the reverse relationship that is identified in Table 1. The index of vertical integration is not significant. The cashflow variable across Advertising, R&D and Net Franchise holds its ground, with two instances of significance, one at the 95% level and one at the 99% level. Again, the Net Franchise variable repeated its significant performance that is established in Table 1. The major difference from Table 1 is that General Motors does not seem to worry about its level of vertical integration. Compared to an earlier study (Ramrattan [1998]), the advertising and R&D equations in this study indicate improved performance. All the advertising coefficients remain significant, though at varying levels. Overall, we now have four significant R&D coefficients against only two in the earlier study. The financial equations compare better with the earlier study. While the dividend equation continues its non-performance, five of the investment coefficients are now significant vs. four in the earlier study. Six finance equations are now significant vs. four in the earlier study (Ramrattam [1998]). We turn now to the results of Chrysler vs. General Motors. Table 2 shows a significant index of vertical integration, which is similar to Ford's reaction to General Motors. The cashflow variable is as significant in this relationship as in the Ford and General Motors relationship. The significant coefficients are located in the first three equations. The network reaction coefficient is significant, but indicates about 60 percent (not 100 percent) of Chrysler to Ford's change in dealership. R&D performance is greatly improved from the earlier study. All five coefficients are now significant, while the previous study indicated that only the Chrysler cashflow coefficient was significant (Ramrattan [1998]). The advertising results are fairly stable-only the constant term did not hold up. The financial model has the same amount of significant influence as in the earlier study (Ramrattan [1998]). The results of Table 2R show that General Motors does not react to Chrysler's previous level of dealership holdings. These results stand up even though the other equations do not perform any worse than those found in a previous study (Ramrattan [1998]). All advertising estimates perform significantly in both studies. The R&D model shows that the Cashflow, Vertical Integration, and R&D variables are now significant, while the earlier study indicated only the latter was significant. The Dividend, Investment, and Finance equations show the same number of significant variables as in the previous study. Based on this study, therefore, we are likely to accept the results that the largest firms' franchise operations do not imitate im·i·tate tr.v. im·i·tat·ed, im·i·tat·ing, im·i·tates 1. To use or follow as a model. 2. a. the smallest firms' franchise operations. Table 3 indicates Chrysler's strong reaction (88 percent) to Ford Motor Company's dealership level. The vertical integration and the cashflow coefficients show the appropriate signs and are highly significant. The previous advertising study (Ramrattan [1998]) indicated an insignificant OPEC influence, which is improved in this study. However, we now have an insignificant constant instead. The R&D equation still does not show that Chrysler reacts to Ford's previous R&D outlay. On the financial end, the Dividend and Investment equations performed about the same, but the Finance equation now shows no significant relation, whereas the previous study had one. Table 3R examines Ford's reaction to the Chrysler dealership system. The dealership equation indicates a significant reaction, albeit only about 15 percent, supported by a significant cash flow coefficient The flow coefficient of a device is a relative measure of its efficiency at allowing fluid flow. It describes the relationship between the pressure drop across an orifice and the corresponding flow rate. and a significant intercept intercept in mathematical terms the points at which a curve cuts the two axes of a graph. . Compared to the earlier study (Ramrattan [1998]), the advertising results are similar, indicating strong competition. However, the R&D coefficient is still insignificant. The financial model here has done better, particularly in the finance equation, where five coefficients are significant vs. only the constant and the interest rate variables in the previous study (Ramrattan [1998]). The investment equation shows five significant coefficients vs. only three previously and the dividend equation holds its ground. 4. Preferred Nonprice Strategy We will now draw some implications for the preordering of strategies. We use the term preorder to characterize whether a firm has a preference to play one particular nonprice weapon-Advertising, R&D, or Dealership system over another. This interpretation pivots on whether the estimated coefficients are close to one, which, according to Schnabel, may be taken as a sign of full competition (Schnabel [1974], p. 34). The average level of significant coefficients for all the results of Tables 1 to 3R are 0.90 for Advertising, 0.80 for Dealership, and 0.70 for R&D. Looking only at General Motors and Ford, the coefficients are rounded to one in dealership competition and slightly less than one (.94) for advertising. The preorder does not change if all coefficients are averaged. The statistical view gives a mixed result of the preordering of strategies. The main concern is whether the 10 percent observed difference between the coefficients is significant. A t-test t-test, n an inferential statistic used to test for differences between two means (groups) only. This statistic is used for small samples (e.g., N < 30). Also called t-ratio, stu-dent's t. on the pairwise differences of the coefficients between Advertising, R&D and Dealership competition did not turn up significant statistics. The p values are 0.32, 0.76, and 0.27 for Net Franchise vs. Advertising, Net Franchise vs. R&D, and Advertising vs. R&D, respectively, indicating that we cannot reject the null hypothesis null hypothesis, n theoretical assumption that a given therapy will have results not statistically different from another treatment. null hypothesis, n of no difference between the coefficient levels. However, a Bartlett test for the equality of variances, taking advantage of the normality normality, in chemistry: see concentration. assumption behind the distribution of the coefficients, yields a probability value of zero, rejecting the hypothesis of the equality of variances (Judge, Griffiths, Hill, Lutkepohl and Tsoung-Chao [1985], P. 447). Because of the mixed results, we may view the results for preordering competition of the non-price variables in two ways. On the one hand, we may consider the coefficients for dealerships equal to one between the two-way rivalry of General Motors and the Ford Motor Company to imply that the greatest competition resides with dealerships. A coefficient for advertising is equal to one only in the one-way reaction of Ford Motor Company to General Motors. On the other hand, while the average significant statistics for the coefficients are 0.90 for Advertising, and 0.80 for Dealership, and 0.70 for R&D, the 10 percent difference poses a mixed statistical result, being significant for the variances and not for the means. From the level of the coefficients and the variances approaches, it is therefore probable that dealership rivalry does about the same as advertising, but better than R&D. 5. Conclusion The paper successfully expanded the empirical work on Bain's paradigm to include dealership rivalry. It found five out of six significant dealership reaction coefficients for the permutations of rivalry between Ford Motor Company, General Motors and Chrysler Corporation. Except for the General Motors and Chrysler relationship, the reaction patterns fail to falsify falsify, v to forge; to give a false appearance to anything, as to falsify a record. Bain's prediction of franchise dealership. General Motors' reaction to Chrysler Corporation may be a result of the smallest firm choosing to follow the largest. The reaction patterns of the second-largest firm to the smallest firm and vice versa VICE VERSA. On the contrary; on opposite sides. show significant but substantially less than a full level of adjustment, viz., about 15 percent vs. only one percent. As in earlier studies, the performance of the advertising and R&D variables are as expected, with six and four coefficients significant, respectively. For preordering, the average level of reaction coefficients appears in favor of upon the side of; favorable to; for the advantage of. See also: favor 0.90 for Advertising and 0.80 for Dealership, and 0.70 for R&D, with statistical support of significance for difference in the variances, but not in the mean values of the results. Overall, however, the results do lend greater empirical support for Bain's differentiated oligopoly hypothesis of the auto industry. (*.) University of California, Berkeley The University of California, Berkeley is a public research university located in Berkeley, California, United States. Commonly referred to as UC Berkeley, Berkeley and Cal , Extension Instructor, Economist at U.S. Department of HUD Hud (h  d), a pre-Qur'anic prophet of Islam. Hud unsuccessfully exhorted his South Arabian people, the Ad, to worship the One God. , and Lecturer lecturer A person who is primarily–if not entirely—involved in the teaching activities of an academic center, who is not expected to perform research or Pt management; in general, lectureships are non-tenured positions at California State
University Enrollment , Hayward.
References Bain, Joe S. Barriers to New Competition. Mass.: Harvard University Press The Harvard University Press is a publishing house, a division of Harvard University, that is highly respected in academic publishing. It was established on January 13, 1913. In 2005, it published 220 new titles. , 1956. Blair, John Blair, John (1732–1800) Supreme Court justice; born in Williamsburg, Va. He attended the Constitutional Convention (1787) and signed the U.S. Constitution. Known for his support of a strong national government, President Washington appointed him to the first U. . Economic Concentration. New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of : Harcourt Brace Jovanovich, Inc., 1972. Blanchard, Olivier, J. The Production and Inventory Behavior of the American Automobile Industry automobile industry, the business of producing and selling self-powered vehicles, including passenger cars, trucks, farm equipment, and other commercial vehicles. . Journal of Political Economy, Vol. 91, No. 3, June 1983. Bresnahan, Toothy and Reiss, Peter C. Dealer and Manufacturer Margins. Rand Rand See Witwatersrand. rand 1 n. See Table at currency. [Afrikaans, after(Witwaters)rand. Journal of Economics, Vol. 16, No. 2, Summer 1985, pp. 253-268. Crandall, Robert. Vertical Integration and the Market for Repair Parts in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Automobile Industry, Vol. XVI, No. 3, July 1968, pp. 212-236. Dhebar, Anirudh, Neslin, Scott A., and Quelch, John A. Developing Models for Planning Retailer Sales Promotions: An Application to Automobile Dealerships, Journal of Retailing, Vol. 63, 4, Winter 1987. Dhrymes, Phoebus J. Econometrics econometrics, technique of economic analysis that expresses economic theory in terms of mathematical relationships and then tests it empirically through statistical research. . New York: Springer-Verlag, 1974. Dhrymes, Phoebus J., Kurz, Mordecia. Investment, Dividend, and External Finance Behavior of Firms, in Robert Farber (ed.), Determinants of Investment Behavior, New York: National Bureau of Economic Research The National Bureau of Economic Research (NBER) is a "private, nonprofit, nonpartisan research organization" dedicated to studying the science and empirics of economics, especially the American economy. , 1967. General Motors Corporation. Competition and the Motor Vehicle Industry. Submitted to the Subcommittee sub·com·mit·tee n. A subordinate committee composed of members appointed from a main committee. subcommittee Noun on Retailing and Subcommittee on Monopoly of the Select Committee on Small Business of the United States Senate. October, 1968. General Motors Corporation. Competition and the Motor Vehicle Industry. Submitted to the Subcommittee on Antitrust Antitrust The antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade. and Monopoly of the Committee on the Judiciary Committee on the Judiciary may mean:
Grabowski, H., and Baxter, N. D. Rivalry in Industrial Research and Development, The Journal of Industrial Economics, Vol. XXI, No. 3, 1973. Helmers, H. O., Davisson, C. N., Taggart, H. F. Two Studies in Automobile Franchising. Ann Arbor Ann Arbor, city (1990 pop. 109,592), seat of Washtenaw co., S Mich., on the Huron River; inc. 1851. It is a research and educational center, with a large number of government and industrial research and development firms, many in high-technology fields such as : Division or Research, Graduate School of Business Administration, 1974. Judge, George G., W. E. Griffiths, R. Carter Hill, Helmut Lutkepohl, and Tsoung-Chao Lee. The Theory and Practice of Econometrics, Second Edition. New York: John Wiley John Wiley may refer to:
Kashyap, Anil K., and Wilcox, David W. Production and Inventory Control at the General Motors Corporation During the 1920's and 1930's, American Economic Review, Vol. 83, No. 3, June, 1993, pp. 383-401. Menge, John. Internal Transfer Pricing Transfer pricing refers to the pricing of goods and services within a multi-divisional organization, particularly in regard to cross-border transactions. For example, goods from the production division may be sold to the marketing division, or goods from a parent company may be and Vertical Integration in the Automobile Industry. Ph.D. dissertation dis·ser·ta·tion n. A lengthy, formal treatise, especially one written by a candidate for the doctoral degree at a university; a thesis. dissertation Noun 1. , M.I.T., 1959, pp. 343-8. Ramrattan, Lall B. Rivalry in the U. S. Automobile Industry: An Advertising Approach. 1986. Unpublished PhD. Dissertation, The New School For Social Research New School for Social Research: see New School Univ. . Ramrattan, Lall B. The Impact of Imports on Price Competition in the Automobile Industry. The American Economist, (Fall 1991). Ramrattan, Lall B. Advertising Rivalry In The U. S. Automobile Industry: A Test of Bain's Hypothesis. The American Economist, (Fall 1994). Ramrattan, Lall B. R&D Rivalry In The U. S. Automobile Industry: A Simultaneous Equation Model Simultaneous equation models are a form of statistical model in the form of a set of linear simultaneous equations. They are often used in econometrics. See also
Scazzieri, Robert, et. al. Symposium symposium In ancient Greece, an aristocratic banquet at which men met to discuss philosophical and political issues and recite poetry. It began as a warrior feast. Rooms were designed specifically for the proceedings. on Vertical Integration. Journal of Post Keynesian Economics Keynesian Economics An economic theory stating that active government intervention in the marketplace and monetary policy is the best method of ensuring economic growth and stability. , Vol. 13, No. 1, (Fall 1990). Schnabel, Morton Morton, village (1990 pop. 13,799), Tazewell co., central Ill., in a grain-farming and livestock area; inc. 1877. Food is canned, and tractor parts, washing machines, and pottery are manufactured. . A Model of Cigarette Advertising, The Antitrust Bulletin, (Fall-Spring, 1974). Simon, Julian. Issues in the Economics of Advertising Urbana: University of Illinois Press The University of Illinois Press (UIP), is a major American university press and part of the University of Illinois. Overview According to the UIP's website: , 1970.
The Determinants of Annual Change in
Dealership Ford Corporation vs. General
Motors Corporation
Annual Data: 1970-1996
System of Equation Results
Net Dealership Advertising in
Description Systems Log Form
Constant -2.82 -2.09
(-3.42) [***] (-1.64) [*]
[LGMNET.sub.t-1] 1.19
(14.04) [***]
LFDVC -0.10
(-2.12) [**]
[LGMAD.sub.t-1] 1.17
(4.85) [***]
[LFDCF.sub.t-1] 0.04 0.79
(6.20) [***] (6.02) [***]
OPECDUM 1.29
(3.56) [***]
[delta][FDD.sub.t]
[delta][GMRD.sub.t-1]
[delta]FDCF
[delta][FDRD.sub.t-1]
[delta][FDV.sub.t]
[(FDNI/FDK).sub.t]
[(FDN/FDK).sub.t]
[(FDInv/FDS).sub.t]
[(FDF/FDS).sub.t]
[(FDNI/FDK).sub.t-1]
[FDSALES.sub.t-2]
[(FDDiv/FDS).sub.t]
[(FDLTD/FDK-FDLTD).sub.t]
[(FDr/FDLTD).sub.t]
[(FDDep/FDK).sub.t]
[ADJ.R.sup.2] .96 .90
R and D in Dividend Per
Description 1st Diff. Form Unit of Sales
Constant 0.02
(3.13) [***]
[LGMNET.sub.t-1]
LFDVC
[LGMAD.sub.t-1]
[LFDCF.sub.t-1]
OPECDUM
[delta][FDD.sub.t] 244.11
(2.14) [**]
[delta][GMRD.sub.t-1] 0.20
(1.97) [**]
[delta]FDCF 0.06
(3.27) [***]
[delta][FDRD.sub.t-1] 0.68
(4.89) [***]
[delta][FDV.sub.t] -0.001
(-0.41)
[(FDNI/FDK).sub.t] 0.004
(0.37)
[(FDN/FDK).sub.t] -0.01
(-1.57)
[(FDInv/FDS).sub.t] -0.05
(-1.52)
[(FDF/FDS).sub.t] 0.0001
(0.02)
[(FDNI/FDK).sub.t-1]
[FDSALES.sub.t-2]
[(FDDiv/FDS).sub.t]
[(FDLTD/FDK-FDLTD).sub.t]
[(FDr/FDLTD).sub.t]
[(FDDep/FDK).sub.t]
[ADJ.R.sup.2] .17 .08
Investment Per Finance Per
Description Unit of Sales Unit of Sales
Constant 0.29 0.30
(18.74) [***] (1.72) [*]
[LGMNET.sub.t-1]
LFDVC
[LGMAD.sub.t-1]
[LFDCF.sub.t-1]
OPECDUM
[delta][FDD.sub.t]
[delta][GMRD.sub.t-1]
[delta]FDCF
[delta][FDRD.sub.t-1]
[delta][FDV.sub.t]
[(FDNI/FDK).sub.t] -0.94
(-3.94) [***]
[(FDN/FDK).sub.t] -0.09
(-2.68) [**]
[(FDInv/FDS).sub.t] -3.01
(-4.15) [***]
[(FDF/FDS).sub.t] -.04
(-1.07)
[(FDNI/FDK).sub.t-1] 0.15
(2.70) [**]
[FDSALES.sub.t-2] -0.11
(-6.96) [***]
[(FDDiv/FDS).sub.t] 3.15 12.72
(2.72) [**] (2.23) [**]
[(FDLTD/FDK-FDLTD).sub.t] 0.06
(3.84) [***]
[(FDr/FDLTD).sub.t] -0.01
(-0.23)
[(FDDep/FDK).sub.t] 2.22
(3.84) [***]
[ADJ.R.sup.2] .66 .20
Constant -1.23 -3.21
(-1.48) (-3.79) [*]
[LFDNET.sub.t-1] 1.18
(14.35) [***]
LGMVC 0.06
(0.83)
[LFDAD.sub.t-1] 0.71
(8.26) [***]
[LGMCF.sub.t-1] 0.03 1.01
(2.44) [**] (10.29) [***]
OPECDUM 0.48
(1.87) [*]
[[Delta]GMD.sub.t]
[[Delta]FDRD.sub.t-1]
[Delta]GMCF
[[Delta]GMRD.sub.t-1]
[[Delta]GMV.sub.t]
[(GMNI/GMK).sub.t]
[(GMN/GMK).sub.t]
[(GMInv/GMS).sub.t]
[(GMF/GMS).sub.t]
[(GMNI/GMK).sub.t-1]
[GMSALES.sub.t-2]
[(GMDiv/GMS).sub.t]
[(GMLTD/GMK-GMLTD).sub.t]
[(GMr/GMLTD).sub.t]
[(GMDep/GMK).sub.t]
ADJ.[R.sup.2] .95 .86
Constant 0.07
(8.39)
[LFDNET.sub.t-1]
LGMVC
[LFDAD.sub.t-1]
[LGMCF.sub.t-1]
OPECDUM
[[Delta]GMD.sub.t] -103.63
(-0.88)
[[Delta]FDRD.sub.t-1] 0.35
(2.19) [**]
[Delta]GMCF 0.04
(1.97) [**]
[[Delta]GMRD.sub.t-1] 0.37
(2.88) [***]
[[Delta]GMV.sub.t] 0.02
(3.46) [***]
[(GMNI/GMK).sub.t] 0.001
(0.07)
[(GMN/GMK).sub.t] -0.08
(-4.80) [***]
[(GMInv/GMS).sub.t] -0.17
(-6.72) [***]
[(GMF/GMS).sub.t] -0.03
(-0.77) [*]
[(GMNI/GMK).sub.t-1]
[GMSALES.sub.t-2]
[(GMDiv/GMS).sub.t]
[(GMLTD/GMK-GMLTD).sub.t]
[(GMr/GMLTD).sub.t]
[(GMDep/GMK).sub.t]
ADJ.[R.sup.2] .37 .59
Constant 0.41 0.09
(24.53) (1.27)
[LFDNET.sub.t-1]
LGMVC
[LFDAD.sub.t-1]
[LGMCF.sub.t-1]
OPECDUM
[[Delta]GMD.sub.t]
[[Delta]FDRD.sub.t-1]
[Delta]GMCF
[[Delta]GMRD.sub.t-1]
[[Delta]GMV.sub.t]
[(GMNI/GMK).sub.t] 0.25
(2.28) [**]
[(GMN/GMK).sub.t] -0.41
(-6.10) [***]
[(GMInv/GMS).sub.t] 0.28
(2.05) [**]
[(GMF/GMS).sub.t] -.004
(-0.02)
[(GMNI/GMK).sub.t-1] 0.11
(1.64) [*]
[GMSALES.sub.t-2] -0.01
(-0.36)
[(GMDiv/GMS).sub.t] -4.73 -1.62
(-8.22) [***] (-1.71) [*]
[(GMLTD/GMK-GMLTD).sub.t] -0.02
(-3.92) [***]
[(GMr/GMLTD).sub.t] -0.23
(-4.51) [***]
[(GMDep/GMK).sub.t] -0.43
(-2.84) [***]
ADJ.[R.sup.2] .66 .42
(***.)= Significant at the 1 percent level.
(**.)= Significant at the 5 percent level, and
(*.)= Sigificant at the 10 percent level.
LGM, LFD, and LCH abbreviated names for the
four firms.
Source: Estimate by author.
The Determinants of Annual Change in
Dealership Chrysler Corporation vs. General
Motors Corporation Annual Data: 1970-1996
System of Equation Results
Net Dealership Advertising in
Description Systems Log Form
Constant 2.37 0.29
(0.82) (1.21)
[LGMNET.sub.t-1] 0.59
(2.10) [**]
LCHVC -0.34
(-2.22) [**]
[LGMAD.sub.t-1] 0.98
(10.70) [***]
[LCHCF.sub.t-1] 0.04 0.74
(1.89) [*] (21.56) [***]
OPECDUM -.10
(-.75)
[delta][CHD.sub.t]
[delta][GMRD.sub.t-1]
[delta]CHCF
[delta][CHRD.sub.t-1]
[delta][CHV.sub.t]
[(CHNI/CHK).sub.t]
[(CHN/CHK).sub.t]
[(CHInv/CHS).sub.t]
[(CHF/CHS).sub.t]
[(CHNI/CHK).sub.t-1]
[CHSALES.sub.t-2]
[(CHDiv/CHS).sub.t]
[(CHLTD/CHK-CHLTD).sub.t]
[(CHr/CHLTD).sub.t]
[(CHDep/CHK).sub.t]
ADJ. [R.sup.2] .54 .93
R and D in Dividend Per
Description 1st Diff. Form Unit of Sales
Constant 0.03
(2.20) [**]
[LGMNET.sub.t-1]
LCHVC
[LGMAD.sub.t-1]
[LCHCF.sub.t-1]
OPECDUM
[delta][CHD.sub.t] -67.54
(-4.19) [***]
[delta][GMRD.sub.t-1] 0.11
(5.75) [***]
[delta]CHCF 0.04
(4.64) [***]
[delta][CHRD.sub.t-1] 0.30
(2.57) [***]
[delta][CHV.sub.t] 0.002
(1.82) [*]
[(CHNI/CHK).sub.t] 0.01
(2.23) [**]
[(CHN/CHK).sub.t] -0.01
(-0.99)
[(CHInv/CHS).sub.t] 0.01
(2.22) [**]
[(CHF/CHS).sub.t] 0.001
(0.12)
[(CHNI/CHK).sub.t-1]
[CHSALES.sub.t-2]
[(CHDiv/CHS).sub.t]
[(CHLTD/CHK-CHLTD).sub.t]
[(CHr/CHLTD).sub.t]
[(CHDep/CHK).sub.t]
ADJ. [R.sup.2] .60 .14
Investment Per Finance Per
Description Unit of Sales Unit of Sales
Constant 0.01 0.43
(0.16) (3.11) [***]
[LGMNET.sub.t-1]
LCHVC
[LGMAD.sub.t-1]
[LCHCF.sub.t-1]
OPECDUM
[delta][CHD.sub.t]
[delta][GMRD.sub.t-1]
[delta]CHCF
[delta][CHRD.sub.t-1]
[delta][CHV.sub.t]
[(CHNI/CHK).sub.t] 0.13
(0.92)
[(CHN/CHK).sub.t] 0.65
(3.44)
[(CHInv/CHS).sub.t] -0.26
(-0.62)
[(CHF/CHS).sub.t] 0.36
(2.18) [**]
[(CHNI/CHK).sub.t-1] .12
(-0.57)
[CHSALES.sub.t-2] -0.26
(-4.73) [***]
[(CHDiv/CHS).sub.t] 37.07 -19.56
(5.38) [**] (-1.77) [**]
[(CHLTD/CHK-CHLTD).sub.t] -0.01
(-0.15)
[(CHr/CHLTD).sub.t] 2.26
(0.76)
[(CHDep/CHK).sub.t] -3.15
(-2.98) [***]
ADJ. [R.sup.2] .33 .35
Constant 11.87 -3.89
(11.85) [***] (-7.86) [***]
[LCHNET.sub.t-1] -0.13
(-1.17)
LCHVC 0.87
(5.64) [***]
[LCHAD.sub.t-1] 0.89
(15.49) [***]
[LGMCF.sub.t-1] -0.09 1.11
(-3.20) [***] (19.30) [***]
OPECDUM 0.26
(1.66) [*]
[delta][GMD.sub.t] -74.90
(-0.44)
[delta][CHRD.sub.t-1] 2.11
(1.76) [*]
[delta]GMCF 0.05
(2.08) [***]
[delta][GMRD.sub.t-1] 0.29
(1.16)
[delta][GMV.sub.t] 0.01
(1.73) [*]
[(GMNI/GMK).sub.t]
[(GMN/GGM).sub.t]
[(GMInv/GMS).sub.t]
[(GMF/GMS).sub.t]
[(GMNI/GMK)sub.t-1]
[GMSALES.sub.t-2]
[(GMDiv/GMS).sub.t]
[(GMLTD/GMK-GMLTD).sub.t]
[(GMr/GMLTD).sub.t]
[(GMcp/GMK).sub.t]
[ADJ.R.sup.2] .68 .96 .12
Constant 0.07 0.40 0.06
(8.52) [***] (23.71) [***] (0.80)
[LCHNET.sub.t-1]
LCHVC
[LCHAD.sub.t-1]
[LGMCF.sub.t-1]
OPECDUM
[delta][GMD.sub.t]
[delta][CHRD.sub.t-1]
[delta]GMCF
[delta][GMRD.sub.t-1]
[delta][GMV.sub.t]
[(GMNI/GMK).sub.t] -0.01 0.23
(-0.27) (2.05) [**]
[(GMN/GGM).sub.t] -0.07 -0.35
(-4.21) [***] (-5.27) [***]
[(GMInv/GMS).sub.t] -0.18 0.34
(-7.06) [***] (2.44) [***]
[(GMF/GMS).sub.t] -0.01 0.15
(-0.17) (0.79)
[(GMNI/GMK)sub.t-1] -0.09
(-1.26)
[GMSALES.sub.t-2] -0.01
(-0.69)
[(GMDiv/GMS).sub.t] -4.37 -1.28
(7.64) [***] (-1.35)
[(GMLTD/GMK-GMLTD).sub.t] -0.01
(-3.69) [***]
[(GMr/GMLTD).sub.t] -0.21
(-3.99) [***]
[(GMcp/GMK).sub.t] -0.37
(-2.39) [***]
[ADJ.R.sup.2] .57 .76 .41
(***.)=Significant at the 1 percent level.
(**.)=Significant at the 5 percent level, and
(*.)=Significant at the 10 percent level.
LGM, LFD, and LCH abbreviated names for the four firms.
Source: Estimate by author.
The Determinants of Annual Change in
Dealership Chrysler Corporation
vs. Ford Motor Company
Annual Data: 1970-1996
System of Equation Results
Net Dealership Advertising in
Description Systems Log Form
Constant 0.01
(0.04)
[LFDNET.sub.t-1] 0.88
(56.74) [***]
LCHVC -0.40
(-4.76 ) [***]
[LFDAD.sub.t-1] 0.79
(7.97) [***]
[LCHCF.sub.t-1] 0.06 0.73
(5.77) [***] (17.65) [***]
OPECDUM 0.26
(1.62) [*]
[delta][CHD.sub.1]
[delta][FDRD.sub.t-1]
[delta]CHCF
[delta][CHRD.sub.t-1]
[delta][CHV.sub.t-1]
[(CHNI/CHK).sub.t]
[(CHN/CHK).sub.t]
[(CHInv/CHS).sub.t]
[(CHF/CHS).sub.t]
[(CHNI/CHK).sub.t-1]
[CHSALES.sub.t-2]
[(CHDiv/CHS).sub.t]
[(CHLTD/CHK-CHLTD).sub.t]
[(CHr/CHLTD).sub.t]
[(CHDep/CHK).sub.t]
ADJ. [R.sup.2] .42 .91
R and D in Dividend Per
Description 1st Diff. Form Unit of Sales
Constant 0.01
(1.86) [**]
[LFDNET.sub.t-1]
LCHVC
[LFDAD.sub.t-1]
[LCHCF.sub.t-1]
OPECDUM
[delta][CHD.sub.1] -66.18
(-2.62) [***]
[delta][FDRD.sub.t-1] 0.03
(-0.87)
[delta]CHCF 0.01
(1.12)
[delta][CHRD.sub.t-1] 0.95
(5.30) [***]
[delta][CHV.sub.t-1] 0.002
(1.19)
[(CHNI/CHK).sub.t] 0.01
(2.16) [***]
[(CHN/CHK).sub.t] -0.01
(-1.05)
[(CHInv/CHS).sub.t] 0.01
(2.67) [***]
[(CHF/CHS).sub.t] 0.002
(0.34)
[(CHNI/CHK).sub.t-1]
[CHSALES.sub.t-2]
[(CHDiv/CHS).sub.t]
[(CHLTD/CHK-CHLTD).sub.t]
[(CHr/CHLTD).sub.t]
[(CHDep/CHK).sub.t]
ADJ. [R.sup.2] .08 .12
Investment Per Finance Per
Description Unit of Sales Unit of Sales
Constant 0.05 -.01
(0.96) (-0.04)
[LFDNET.sub.t-1]
LCHVC
[LFDAD.sub.t-1]
[LCHCF.sub.t-1]
OPECDUM
[delta][CHD.sub.1]
[delta][FDRD.sub.t-1]
[delta]CHCF
[delta][CHRD.sub.t-1]
[delta][CHV.sub.t-1]
[(CHNI/CHK).sub.t] -0.06
(-0.30)
[(CHN/CHK).sub.t] 0.50
(2.62) [***]
[(CHInv/CHS).sub.t] -0.46
(-0.81)
[(CHF/CHS).sub.t] 0.19
(1.15)
[(CHNI/CHK).sub.t-1] -.02
(-0.08)
[CHSALES.sub.t-2] -0.24
(-4.30) [***]
[(CHDiv/CHS).sub.t] 32.37 5.35
(4.75) [***] (0.45)
[(CHLTD/CHK-CHLTD).sub.t] 0.08
(1.31)
[(CHr/CHLTD).sub.t] -0.07
(-0.19)
[(CHDep/CHK).sub.t] 0.52
(0.51)
ADJ. [R.sup.2] .34 .13
Constant 7.88 -0.98
(6.91) [***] (-1.57)
[LCFNET.sub.t-1] 0.15
(3.10) [***]
LFDVC -0.05
(-0.90)
[LCHAD.sub.t-1] 0.87
(5.53) [***]
[LFDCF.sub.t-1] 0.03 0.72
(3.87) [***] (8.70) [***]
OPECDUM 0.77
(1.97) [*]
[delta][FDD.sub.t] 187.84
(1.61)
[delta][FDRD.sub.t-1] 0.13
(1.32)
[delta]FDCF 0.12
(2.58) [***]
[delta][FDRD.sub.t-1] 0.77
(5.56) [***]
[delta][FDV.sub.t] -0.001
(-0.19)
[(FDNI/FDK).sub.t]
[(FDN/FDK).sub.t]
[(FDInv/FDS).sub.t]
[(FDF/FDS).sub.t]
[(FDNT/FDK).sub.t]
[CHSALES.sub.t-2]
[(FDDiv/FDS).sub.t]
[(FDLTD/FDK-FDLTD).sub.t]
[(FDr/FDLTD).sub.t]
[(FDDrp/FDK).sub.t]
ADJ. [R.sup.2] .92 .85 .11
Constant 0.02 0.28 0.28
(2.99) [***] (19.20) [***] (1.57)
[LCFNET.sub.t-1]
LFDVC
[LCHAD.sub.t-1]
[LFDCF.sub.t-1]
OPECDUM
[delta][FDD.sub.t]
[delta][FDRD.sub.t-1]
[delta]FDCF
[delta][FDRD.sub.t-1]
[delta][FDV.sub.t]
[(FDNI/FDK).sub.t] 0.002 -0.94
(0.21) (-3.94) [***]
[(FDN/FDK).sub.t] -0.01 -0.09
(-1.62) [*] (-2.87) [***]
[(FDInv/FDS).sub.t] -0.05 -2.99
(-1.41) (-4.14) [***]
[(FDF/FDS).sub.t] 0.001 -0.04
(0.14) (-1.02)
[(FDNT/FDK).sub.t] 0.15
(2.99) [***]
[CHSALES.sub.t-2] -0.10
(-7.00) [***]
[(FDDiv/FDS).sub.t] -3.11 13.28
(2.76) [***] (2.41) [***]
[(FDLTD/FDK-FDLTD).sub.t] 0.06
(3.96) [***]
[(FDr/FDLTD).sub.t] -0.01
(-0.21)
[(FDDrp/FDK).sub.t] 2.31
(4.03) [***]
ADJ. [R.sup.2] .11 .67 .20
(***.)= Significant at the 1 percent level. (**.)= Significant at the 5 percent level, and (*.)= Significant at the 10 percent level. LGM LGM Last Glacial Maximum LGM Little Green Men (Astronomical: first used as the designation for pulsars) LGM Lembaga Getah Malaysia (Malay: Malaysian Rubber Board) LGM The Lone Gunmen , LFD LFD Laufend (German: current) LFD Laboratory for Fluorescence Dynamics (University of Illinois at Urbana-Champaign) LFD Left for Dead (band) , and LCH LCH Launch LCH London Clearing House LCH Langerhans Cell Histiocytosis (medicine; immune system disorder) LCH Latch LCH Light Combat Helicopter LCH Lake Charles, LA, USA - Municipal (Airport Code) abbreviated names for the four firms. Source: Estimate by author. |
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