This dissertation provides a contribution to the understanding of the interactions between the firm's financial structure and its operating decisions. The main idea is that financial structure impacts the payoff to the firm's decision-maker and that this impact on the managerial payoff will in turn affect his optimal response when confronted with different possible operating decisions. A particular focus is on the case where the manager's optimisation problem arises in a strategic environment in which the firm competes with rival firms in a product market. The first main chapter reconsiders the strategic effect of debt, as first analysed by Brander and Lewis (1986), under the novel assumption that quantity choices are made by managers whose objective is to avoid bankruptcy. The basic result is that quantity choices, which are strategic substitutes under profit maximisation, may turn into strategic complements when the quantity choice is made by managers. This reversal in the nature of competition arises under reasonable assumptions on the firm's profit function. It allows debt to be used to sustain more collusive product market outcomes than in the benchmark case where firms maximise profits, thereby avoiding, and indeed reversing, the pro-competitive limited liability effect of debt, as described by Brander and Lewis (1986). Delegation of the quantity choice to a bankruptcy-averse manager is shown to occur in a dominant strategy equilibrium. The next chapter analyses the effect of asymmetric information between a firm and its outside investors on the firm's competitive position in a model where first-period competition is followed by a financing stage a la Myers and Majluf (1984). Interim profit generated by the competition stage takes the role of financial slack and determines the extent to which external equity finance is required for a new investment opportunity. The full set of equilibria of the financing game is characterised and financial slack is formally analysed as a comparative statics variable. Using this the firm's first period objective is derived from first principles. In contrast to models of predatory behaviour, one finds that in the presence of an adverse selection problem the need to finance externally may provide a strategic benefit rather than a strategic disadvantage. The reason is that the adverse selection problem may induce speculative behaviour, which will make the firm more aggressive vis a vis its rival. The last main chapter analyses a model where the firm's manager is asked to make an informed investment decision after evaluating the prospects of an investment project. In this model, which exhibits both moral hazard and hidden information on the part of the manager, different remuneration schemes are discussed and the optimal contract between financial investor and manager is derived. Assuming the manager is risk-neutral and protected by limited liability, a benefit from diversification is shown to exist, in that the right incentives can be provided more cheaply when the manager is supervising more than one project. This occurs even though the projects are technologically unrelated and choices made on one project do not constrain the choices on any other project.

The purpose of this present study is to identify and evaluate obstacles in the way of liberalising banking and insurance services in the EC area. Two countries are used as cases for this purpose: the UK and Greece. The UK cases represent the barriers to freedom of financial services in the developed EC countries while the Greek cases represent those of the developing EC countries. The distinction between developed and developing countries is considered as necessary since the rationales that exist for erecting barriers to freedom of financial services seem to vary according to the level of development. In the developed countries protectionist measures are imposed to safeguard the interests of the consumers, while in the developing countries the placing of strict barriers to trade in international financial services is used mainly as support for protection of the domestic financial sector and financial protectionism. In the UK case studies barriers in the way of liberalising banking and insurance services are identified and evaluated in the light of the divergence of supervisory philosophies and practices between the UK and the continental European countries. The UK authorities have adopted a flexible supervisory system which is considered by the other European countries as one that moves in a direction inconsistent with the objective of preserving the integrity of the financial system. In the Greek case studies the analysis suggests that the unification of the European financial sectors would have detrimental effects not only on the domestic financial sector but also on the whole economy. The authorities would find it very difficult to accept a measure which would bring about complete freedom of competition, particularly within the timescale set by the EC Commission - ie the end of 1992.

This study is concerned with alternative industrial strategies for employment creation. The two strategies are export-oriented and import substitution industrialisation. Malaysia tried the import substitution strategy and achieved some degree of success in the period 1957 to 1970. But with high unemployment and the limitation of the domestic market, another strategy then had to be pursued. So in the early 1970s, (emulating the newly industrialised countries) Malaysia embarked on an export-oriented industrialisation strategy. Two instruments are used by the Malaysian government to promote those strategies; fiscal incentives and trade policy. The study finds that fiscal incentives have promoted export-oriented industrialisation. Trade policy initially helped import substitution but in later years the policy was liberialised to approach a free trade regime. The effects of these two instruments are examined through their influence on the cost of capital to manufacturers. The study finds that fiscal incentives have reduced capital cost much more than trade policy. The study then examines the manufacturing sector's ability to generate employment. Two methods are used; an estimation of elasticity of substitution and a case study of the characteristics of export-oriented and domestic-oriented establishments. The elasticity of substitution measures flexibility to absorb labour. The estimates show that export-oriented establishments have greater substitution possibilities than domestic-oriented ones. These estimates are substantiated by qualitative information, namely establishments responses to policy changes. This information is obtained through a detailed study of establishments characteristics. Two industries - textiles and electrical/electronics - were chosen as case studies. The characteristics show that in general export-oriented establishments can absorb more labour through high growth rates and employment size. Thus, export-oriented industrialisation can generate more employment than import substitution because its elasticity of substitution is larger and there is higher absorption of labour by export-oriented establishments. The thesis suggests two ways to increase employment: first, to promote EOI because its employment potential is greater than ISI, and second, to increase the proportion of labour used through changes in relative factor price because capital-labour substitution exists. The labour coefficient can be increased by 8 - 25 per cent if factor market distortions are eliminated. This increase represents 120,000 to 360,000 new jobs in the Malaysian manufacturing sector. Two policy thrusts are suggested for the promotion of EOI: (1) Liberalisation of trade policy, namely the reduction not only of average tariff but also its dispersion. The present low and stable exchange rate regime should be maintained, because it encourages exports. (2) Reform of the fiscal incentive system. More direct and indirect exporting industries should be added to the list of promoted industries/activities. In addition, new export incentives should be introduced such as providing utilities for exporters at levels equal to other competing countries and benefits of existing ones increased. Relative factor prices can be changed through trade policy and fiscal incentives. The import duty (tariff) on machinery and equipment should be reduced and exemption of import duty withdrawn, so that capital prices move closer to world levels. One of the fiscal incentives, the Investment Tax Allowance, should stop because its benefits directly favour capital users. On the other hand, benefits to labour users should be introduced, for example the government should offer an abatement of income for labour incentive to support labour use.

This thesis considers different aspects of the liberalisation and simultaneous economic regulation of network utilities in the European Union. Two groups of arguments justify that regulation is maintained in these industries after the removal of barriers to competitive entry. The first group of arguments is linked to the natural monopoly characteristics displayed by such services. These imply that competition cannot be relied upon to restrain the dominant position of network operators. The second group of arguments relates to the social dimension, or public service nature, of utility services. The essential role played by these services justifies government intervention in form of price controls, universal service obligations and other qualitative regulations. The thesis has two parts of different nature, each part comprising two chapters. In the first part, an introductory chapter describes the framework within which the economic regulation of network utilities is inscribed, and discusses key trade-offs between different regulatory policy objectives. The second chapter analyses how the regulatory framework for liberalised network industries developed in the UK compares to the framework in place in Germany. Germany has embarked on reform of its network utilities considerably later than the UK, and displays unique characteristics in its industry structures, in particular a strong federal element. The German case illustrates how the general economic principles underlying the liberalisation and regulation process are interpreted in the European environment, and are adapted to national characteristics. The second part of the thesis focuses on specific aspects of liberalisation and regulation using econometric techniques. In chapter 3, access price elasticities in the fixed telephony industry are estimated on the basis of a pseudo-panel. The main question addressed is whether the rebalancing of tariffs that has taken place in the wake of liberalisation has had the potential to deteriorate household access to the fixed telephone network. The last and fourth chapter looks at patterns and determinants of supplier switching in the domestic gas and electricity markets in Great Britain using data from a true household panel. Its main conclusion is that the likelihood of supplier switching is influenced more strongly by variables linked to cost savings than by socio-demographic factors such as income.

This thesis studies the efforts of a number of large electronics firms to enter and survive in the computer industries of the USA and Britain, from the Second World War to the early 1970s. It contrasts the relative failure of these firms with the greater ability to survive in this sector displayed by single product business machine companies and a number of new, start up, computer firms. The potential advantages that the multi-product electronics enterprise should have had in the new computer market are seen to have been outweighed by these firms being over burdened by the very scope of their operations. Their efforts to cover the whole electronics industry, rather than concentrating on a few sectors, mitigated the potential that they had. A number of case studies of such firms, both British and American, form the heart of this study. The main studies are:- UK: Ferranti, Electrical and Musical Industries and English Electric. US: Radio Corporation of America, and General Electric. To contrast the strategies and structures of the electronics combines, a number of short studies are made of British and American business machines and start-up companies: UK: International Computers and Tabulators. US: International Business Machines, and shorter studies on Burroughs, Control Data Corp., Digital Equipment Corp., Honeywell, National Cash Register, and Sperry-Rand. Study of the electronics firms in the computer industry sheds light on the overall weakness of the broad-based, multi-product, British and American electronics company in the electronics industry as a whole. There is also some comment on the roles of the two governments in shaping the computer industry.

The thesis's objective is to describe the relationship between inland capture fisheries management and the welfare of the poor m Bangladesh. Existing economic models of fisheries management do not address issues of income-distribution, concentrating instead upon rent-maximisation. The thesis therefore aims to develop new models of the distributional impact of management interventions, based upon a qualitative and quantitative understanding of the social, institutional and economic processes whereby fishery incomes are created and distributed. The study site is Hail Haor, a 13,600 ha floodplain in N.E. Bangladesh. Descriptions of its physical ecology, fishing technologies and fishing communities are given. There follows a detailed explanation of the social, institutional and economic transactions whereby fishing incomes are distributed between fishing labour, lessees, sub-lessees, government officials and the government. Estimates of yields, sales and employment levels are presented on a per hectare basis. Sales are divided between labour income, fishing costs and tolls. Tolls are in turn apportioned to the various groups of recipients. Fishermen's access to profitable fishing activities is shown to be a function of religion and social and economic status. Poor fishermen tend to operate with low-yield, labour-intensive gears, in shallow water and during the flood season. They therefore do not perceive themselves to benefit from policies that enhance the dry-season, capital-intensive fishery. Simulation and analytical models demonstrate how current policy interventions benefit rich people at the expense of poorer fisherfolk. They raise rents, which accrue to rich people, by reducing employment, upon which the poor depend. They also postpone the catch from the labour-intensive flood season fishery to the capital-intensive dry-season fishery. It is concluded that existing policy is regressive and that fisheries assessments should address the issue of income-distribution as well as that of rent-maximisation. Appropriate assessment methodologies are proposed.

The neofunctionalist literature asserts that supranational institutions play a crucial role in shaping the process of European integration. Yet, it is not apparently obvious why institutions with far less capabilities and resources than national ones can be so effective. The thesis tries to explain this puzzle focusing on the European Commission. It takes up two related questions: Which motives drive this institution. Under which conditions does it reach its objective (and, hence, affect integration). In other words, the thesis applies domestic theories of bureaucratic and executive politics to the European Union. First, it tests Niskanen's and Dunleavy's hypotheses on bureaucratic preferences on the Union competition and regional policies. It asserts the preeminence of the work-related preferences of the Commission, consisting of managerial discretion and broad scope of functions. Second, it uses a formal model of EU legislative politics and the work of Epstein and O'Halloran and of Gilligan and Krehbiel to quantitatively test the factors that increase the statutory discretion delegated to the Commission. The results show that the uncertainty facing Union legislators about policy actions, policy types and informal decision rules are the most important determinants. Finally, it uses the work of McCubbins and Page to quantitatively test the factors that increase the likelihood and the stringency of procedural controls of the Commission's functions. The results show that unanimity, level of conflict among the Union institutions and uncertainty are key determinants for the establishment of these controls. Level of conflict and uncertainty are also important factors affecting the degree of stringency in control. In conclusion, the Commission enjoys broader discretion and, hence, affects integration when 1) qualified majority is used in the Council and 2) only the Commission is in charge of implementation. However, we should be cautious about its actual room of maneuver because broader discretion correlates positively with the stringency of control.

The thesis is organized around two closely interlinked questions: (a) At a theoretical level, is it the case that diversification activities driven by economies of scope should lead to a positive correlation between diversification and profitability (b) Empirically, can a theoretical model account for observed patterns of diversification activities over time and across countries Following a general discussion of the main issues related to diversification in chapter 1, chapter 2 answers to the first question in the negative. In a model where diversification is induced by the presence of synergies, it is shown that diversified firms may be on average the less efficient firms on the market and may survive only due to the presence of synergies. This is consistent with the results of earlier empirical studies, showing no correlation between diversification and profitability. Therefore the empirical part of the thesis focuses on patterns of diversification rather than on the link with profitability. Models that attribute diversification to the presence of 'economies of scope' suggest that diversification patterns are determined by technological factors, that are stable over time and over countries. In chapter 3 a specific sector (food and drink) is analysed in the U.K. over a long time period (1962- 1986) and the U.K. experience is compared to that of Italy (in 1986) through a standard loglinear model and a separate analytical approach. The main results are as follows: (1) U.K. diversification patterns are remarkably stable over time; (2) Italian diversification patterns appear quite different from those of the U.K., whether in 1962 or in 1986. Since overall diversification levels for the U.K. in 1962 are similar to those in Italy in 1986, it seems that patterns of diversification may be induced by country specific factors. In order to unravel the difference between U.K. and Italian experience in chapter 4 a series of case studies of specific industries and firms is carried out. They suggest that in the Italian economy, where the distribution sector is poorly developed, large firms can enjoy a strong advantage by building up their own distribution networks. While the case studies indicate the possible importance of several other factors, it is this factor that appears to be the single most important influence underlying the difference between the U.K. and Italy.

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