Successive markets constitute a natural framework to study the value chain. This chain is built through the technological linkage between markets where inputs and the corresponding outputs are produced. If goods pass through a chain of imperfectly competitive markets, in excess of the value markups are also added, at each step, to the costs. This thesis firstly proposes a unified framework to analyze competition in successive oligopolies. Analyzing and developing such a general framework forms a basis for the analysis of entry of new firms and of collusive agreements in the same market, like horizontal mergers, or through different markets, like vertical integration. The results bring new insights on equilibrium outcomes of both collusive agreements and entry of new firms.

Affordability continues to be a major challenge for housing in America. According to the Joint Center for Housing Studies of Harvard University (JCHS), in 2006, 57 million households were moderately and severely cost burdened in America. Although high housing prices and the lack of real income growth are cited as the main factors behind the housing affordability problem, it has been proven that land use regulations have some responsibility in this matter as well. Data from the JCHS suggests that between 2002 and 2005, the average appreciation percentage in housing prices was greater in most stringent regulatory environments when compared to less restrictive environments. Despite this fact, and compared to analyses performed in other states, the relationship between the stringency of local land use regulatory environments and housing has not been fully addressed in Texas. The methodological approach used to characterize this relationship has been by means of the creation of a composite index measuring the stringency of local regulatory environments. In response to this lack of evidence of the characteristics of local land use regulatory environments in Texas, this research created the first city-level index characterizing local regulatory environments for housing markets in the Houston-Galveston Area. The index was created taking into account both the different and the most recent practices for the creation of indices. The index created proved to be a valid and reliable measure capable of taking into account the different aspects of the relationship between land use regulations and housing markets. Correlation procedures allowed the detection of a significant relationship between the stringency of local land use regulatory environments and local traits such as median family income, race distribution, poverty, and median housing values. After alternative indices were developed for a sensitivity and uncertainty analysis, the index proved to be a statistically robust measure against modifications on the different assumptions used for its creation. Further research could use this new composite index in empirical analysis to look at the statistical effect of regulatory environments on variables such as housing values and rent prices.

This thesis consists of five self-contained papers, which are all related to the financial markets in the three Baltic States, Estonia, Latvia and Lithuania.  Paper [I] studies the impact of news from the Moscow and New York stock exchanges on the returns and volatilities of the Baltic States' stock market indices using a time series model that accounts for asymmetries in the conditional mean and variance functions. We find that news from New York has stronger e¤ects on returns in Tallinn. High-risk shocks in New York have a stronger impact on volatility in Tallinn, whereas volatility in Vilnius is more in.uenced by high-risk shocks from Moscow. Riga does not seem to be affected by news arriving from abroad. Paper [II] suggests a nonlinear and multivariate time series model framework that enables the study of simultaneity in returns and in volatilities, as well as asymmetric effects arising from shocks and exogenous variables. The model is employed to study the three Baltic States' stock exchanges. Using daily data, we find recursive structures, with returns in Riga, directly depending on returns in Tallinn and Vilnius, and Tallinn on Vilnius. For volatilities, both Riga and Vilnius depend on Tallinn. Paper [III] studies the link between political news, and the returns and volatilities in the Baltic States' stock markets. We find that domestic and foreign non-Russian political news led, on average, to lower uncertainty in the stock markets of Riga and Tallinn in 2001-2003. At the same time, political risk from Russia increased the volatility of the stock market in Tallinn. There is a weak relationship between political risk and the stock market volatility in the Baltic countries in 2004-2007. Paper [IV] studies the impact of market jumps on the time varying return correlations between stock market indices in the Baltic countries. An EARJI-EGARCH model facilitating direct modeling of the time varying return correlations is introduced. The empirical results indicate that there are quite a large number of identified jumps in the emerging Baltic States' stock markets. Isolated market jumps in one of the markets generally have no or small e¤ects on the time-varying correlations. In contrast, simultaneous jumps of equal sign increase the average correlation, in some cases by as much as 100 percent. In Paper [V] the hypothesis that financial development promotes economic growth is tested for the three Baltic countries using a time series approach that allows for interactions between the countries. We find that economic growth is a positive function of financial development, proxied by the amount of bank credit to the private sector, in the long run. The results also show that there is long run interaction between the three Baltic countries.

Best execution obligations weigh on brokers when they execute orders to trade in shares for clients. These obligations have been seen as an outflow of general agency duties, and have been complemented by regulatory requirements related to best execution, dissemination of trading data, the handling of client orders and – in the United States – an obligation to execute at the best publicly available price or better (price protection). Here, different sets of real-world rules are analyzed with regard to transactional efficiency. Economic analyses are used to compare the effects of different rules, and are underpinned by a detailed analysis of relevant rules in the United States, the European Union, France, Sweden and England & Wales. Several normative conclusions can be drawn. Best execution rules that impose an agency duty on brokers do not seem to contribute in a discernible way to increased transactional efficiency. In contrast, disclosure rules that require both brokers and trading venues to provide ex post information about execution quality, and about how client orders have been routed, may contribute to mitigating the information asymmetry between brokers and clients. The compliance costs associated with such rules are outweighed by the positive effects on transactional efficiency. Lastly, a solution such as the US National Market System, which entails consolidated collection and dissemination of market data as well as price protection, can deliver significant efficiency gains through the virtual consolidation of trading venues. It also allows for more detailed regulations on different aspects of order execution, allow order execution regulations to function better, and is conducive to deeper integration of trading. However, creating such a system entails large initial investments. In the end, the choice whether to create a tightly-knit market system or not has wide-ranging implications for market structure, the design of regulatory rules and market integration.

This dissertation consists of three chapters; each models competition in natural gas markets. These models provide insight into interactions between changes in market conditions/policies and market players’ strategic behavior. In all three chapters, we apply our models to a natural gas trade network formed by using BP’s Statistical Review of World Energy 2010 major trade flows. In the first chapter, we develop a model for the world natural gas market where buyers and sellers are connected by a trading network. Each natural gas producer is a Cournot player with a fixed supply capacity. Each of them is also connected to a unique set of importing markets. We show that this constrained noncooperative Cournot game is a potential game and its potential function has a unique maximizer. In the scenario analysis, we find that any exogenous change affecting Europe also has an effect in the Asia Pacific. The reason is that two big producers, Russia and the Middle East, are connected to both markets. We also find that a collusive agreement between Russia and the Middle East leads them to specialize in supply to markets based on their marginal costs of exporting natural gas. The second chapter is devoted to analyzing the impacts of North American shale gas on the world natural gas market. To better represent the North American natural gas market, this chapter also allows for perfect competition in that market. We find that North America exports natural gas when its supply curve is highly elastic and hence the domestic price impact of its exports is very small. Even so, the price impacts on the importing markets are substantial. We also find that shale gas development in North America decreases dominant producers’ market power elsewhere in the world and hence decreases the incentive of any parties to form a natural gas cartel. In the third chapter, we relax the assumption of fixed supply capacities and allow for natural gas producers to invest in their supply capacities. We assume a two period model with no uncertainty and show that there is a unique Cournot-Nash equilibrium and the open-loop Cournot-Nash equilibrium and closed-loop Cournot-Nash equilibrium investments coincide.

A free and flexible business environment attracts international organisations to those markets that have big growth potential and high profit margins. To penetrate emerging markets is of great interest to any international organisation. The situation gets more intense if it is in the field of telecommunications. Telecommunications (telecoms) and information technology (IT) are generically known as the information and communication technologies (ICT) industries. ICT is one of the fastest growing industries in the world and is also considered among the biggest markets in terms of customer base, growth and profitability. The competition is very high in such markets, so relatively unique, attractive and extraordinary business strategies are usually practiced by these companies. The situation may create an atmosphere of upheavals and uncertainties in such markets. Extraordinary or unethical business policies can not only affect the business of other organisations, but also has some after-effects on societies and the mindset of target nations and market ethics. Organisations are very much engaged with society and work in the social environment, therefore the socio-cultural components is of great importance when designing business strategies. Exploring the facts about emerging markets and by analysing the case of Chinese company Huawei in the Pakistani telecom market, this thesis gives investigates and assess the success factor of this Chinese company. This thesis highlights the upheaval factors of emerging markets, by analysing the role of cultural interests and the mindsets of target nations for organisations planning their strategies

The purpose of this research is to explore the motivation of business group firms to adopt pyramidal ownership structures. The traditional approach claims that pyramids are useful in tunneling resources to other affiliates by transferring value to firms with high cash flow rights of controlling shareholders. Using a unique dataset of 7,180 Ecuadorian firms, I analyze the transmission of profits' shocks among group firms to assess the existence and the amount of tunneling. The comprehensive ownership information allows me to identify pyramidal and horizontally owned group firms separately and better understand the nature of their ownership structure. The results provide support for the existence of tunneling in Ecuadorian business groups. About 70% of the profits of the average group firm are transferred to another affiliate, although only half of this money shows up on its books. An alternative explanation for the flow of money among group firms is the existence of internal capital markets to substitute for imperfections in the external market. I test this hypothesis by comparing the impact of cash flow availability in the investment decision of group firms with that of stand-alone firms. Group firms' cash flow to investment sensitivity appears to be only half of the value for comparable standalone firms. Moreover, group liquidity is also a determinant of the average group firm's investment, especially for pyramidal firms. The analysis sheds light on the nature of business groups in Latin America, their ownership patterns, and their resource allocation decisions.

Financial market and its various components are currently in turmoil. Many large corporations are devising new ways to overcome the current market instability. Consequently, any study fostering the understanding of financial markets and the dependencies of various market components would greatly benefit both the practitioners and academicians. To understand different parts of the financial market, this dissertation employs time series methods to model causality and structure and degree of dependence. The relationship of housing market prices for nine U.S. census divisions is studied in the first essay. The results show that housing market is very interrelated. The New England and West North Central census divisions strongly lead house prices of the rest of the country. Further evidence suggests that house prices of most census divisions are mainly influenced by house price changes of other regions. The interdependence of oil prices and stock market indices across countries is examined in the second essay. The general dependence structure and degree is estimated using copula functions. The findings show weak dependence between stock market indices and oil prices for most countries except for the large oil producing nations which show high dependence. The dependence structure for most oil consuming (producing) countries is asymmetric implying that stock market index and oil price returns tend to move together more during the market downturn (upturn) than a market boom (downturn). In the third essay, the relationship among stock returns of ten U.S. sectors is studied. Copula models are used to explore the non-linear, general association among the series. The evidence shows that sectors are strongly related to each other. Energy sector is relatively weakly connected with the other sectors. The strongest dependence is between the Industrials and Consumer Discretionary sectors. The high dependence suggests small (if any) gains from industry diversification in U.S. In conclusion, the correct formulation of relationships among variables of interest is crucial. This is one of the fundamental issues in portfolio analysis. Hence, a thorough examination of time series models that are used to understand interactions of financial markets can be helpful for devising more accurate investment strategies.

Drawing insights from liability of foreignness, the punctuated equilibrium model and the resource-based view, this dissertation develops an integrated model to identify the successful strategies and characteristics of both domestic and foreign firms operating in emerging markets, affected by regulatory punctuations. Accordingly, three research questions are addressed: Why are some foreign firms more likely to survive than other foreign firms? Why are some domestic firms more likely to survive than other domestic firms? Are there any similarities between successful foreign firms and successful domestic firms? Using event-history methodologies and the Mexican banking industry as the unit of analysis, this dissertation shows the following results: Foreign firms (banks) from countries with stronger commercial ties to Mexico (the focal emerging market), were less likely to exit the banking industry. Also, the likelihood of exiting the industry, by a foreign firm, was negatively related to domestic firm (bank) acquisitions. For the domestic firms (banks), there was a positive relationship between international diversification and firm survival and a negative relationship between aggressive (loan) growth and firm survival. Also, marginal support was found about the positive relationship between “grupo” affiliation and firm survival. This research contributes to the extant literature by extending current theories when considering the effect of radical change. For instance, while punctuated equilibrium provides a good “environmental” explanation about a firm’s need to adapt to radical change, it does not suggest how firms should adapt to this change. However, by providing an explanation on how firms suppose to adapt to this radical change, this dissertation had expanded the theoretical implication of the punctuated equilibrium model. Similarly, the present dissertation provides a theoretical extension to liability of foreignness by finding that not all foreign firms face the same liability of foreignness. Lastly, the resource-based view is also extended by this dissertation research, as it is found to have implications for emerging markets firms that are different from foreign developed market firms.

CEO succession decisions are an important part of boards of directors’ responsibilities to shareholders. I study two aspects of these decisions. First, I examine whether or not forced CEO departure decisions are based on information that the board of directors has, but external investors do not. I find that the proxy for private information in the forced CEO departure decision is positively related to abnormal returns at the forced CEO departure announcement. This is consistent with the hypotheses that prior to the departure announcement, investors underestimate the probability of forced CEO departure, and that private information revealed in forced CEO departure announcements has positive implications for firm value. A second question related to boards of directors’ CEO succession decisions concerns their decisions to participate in the external market for CEO talent. I find evidence suggesting that board decisions to participate in the external market for CEO talent are influenced by the costs and benefits of doing so. Specifically, cross sectional analyses of a proxy for industry homogeneity shows that this variable is positively related to external labor market participation, more standardized search processes, and a higher likelihood that a newly appointed CEO will survive three years or more. These findings are generally consistent with prediction that when industries are more homogenous, external search costs are lower, and higher quality matches may be obtained. I also test hypotheses related to benefits of matching to individuals with industry specific skills versus general management skills. I find that for several alternative proxies for industry specific skill demand, there is a negative relation between demand for industry specific skills and the decision to hire externally outside the industry. This can be interpreted as support for hypotheses that cross sectional variation in benefits associated with industry specific skills leads to fewer CEO appointments outside the industry, while benefits of general management skills are associated with a higher likelihood of inter-industry CEO appointment.