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Name:Alaskey, Mary
Date: Spring 2003
Major(s): Economics
Thesis Committee: T. Nonnenmacher, B. Afrasiabi
Title: Napster: How has New Digital Technology Impacted the Recording Industry’s Distribution of Compact discs in the United States?
Abstract: In 1999, digital music traveled through fiber optics from one computer to the next. Napster paved the way for downloading digital music in college dorms around the world. The RIAA soon filed a lawsuit against Napster. Eventually, Napster had to shut down its cyberspace transferring of music. Consumers did not stop demanding digital downloads of music over the Internet. Therefore, cloes, like Kazaa, Morphus, and I-Mesh became popular as well. Researchers for the RIAA believe Internet downloading has caused consumers to decrease their demand for compact discs, which has led to a decline in compact disc sales. This study examines how personal computer sales, disposable income and Napster have reduced the demand for compact disc sales. Also, this study will consider alternative ways on slowing piracy. Digital music has effected the recording industry by declining compact disc sales; therefore, this study examines new methods for adaptation by the recording industry too.
Name:Armstrong, Matthew
Date: Spring 2003
Major(s): Economics
Thesis Committee: E. Adams, A. Baskan
Title: Determinants of Underpricing Initial Public Offerings: Evidence from the Big IPO run-ups from 1995-2000
Abstract: Initial public offerings underpricing increased substantially during the late 1990’s. This increase in underpricing has resulted in several pending lawsuits and increased scrutiny on Wall Street. This paper targets a unique sample of IPOs from 1995-2000 that exhibited the greatest initial returns, and through the use of several determinants tries to provide some reasoning for this underpricing. All the determinants used have also been used in previous studies regarding other samples, yet none have dealt with solely those IPOs that exhibited the exuberant amount of underpricing as the sample used in this paper.
Name: Arnold, Will
Date: Spring 2003
Major(s): Economics
Thesis Committee: S. Casler, J. Sickafuse
Title: The Impact of GDP, Population, Medicaid and Medicare on the Rising Health Care Expenditure
Abstract: Many Americans remain without adequate or any health care coverage at all. Prices on medical care are skyrocketing and there doesn’t appear to be any sign of slowing down. The health care market follows a simple supply and demand model. There are several outside factors, meaning factors that aren’t necessarily directly tied to health care that may impact health care expenditure. There are also several factors in the health care field that may or may not have a large impact on the rising expenditure. A regression analysis of the impact on health care expenditure by GDP, Population, Medicaid and Medicare was run.
The regression analysis provide proof that GDP, Population, Medicaid and Medicare all do have some impact on health care expenditure. The data combined with the regression analysis, show that by working with outside and inside factors to gain a better understanding of the health care market a solution for rising health care expenditure is within reach.
Name: Baker, Bradley
Date: Spring 2003
Major(s): Economics
Thesis Committee: E. Adams, J. Sickafuse
Title: An Event Study Analysis: The Profitability of Olympic Sponsorship with Regards to Ambush Marketing in the Olympic Setting
Abstract: In today’s highly competitive financial world, corporate sponsorship has become one of the most popular marketing techniques. With corporate sponsorships, companies both large and small hope to get their name advertised not only across the country, but also on a global platform. Corporations sponsor countless sporting events, along with the stadiums in which these events take place. Of these sorting events, there is one that towers above all others; the Olympics are a place where corporations are taking advantage of sponsorship. The Olympics are broadcast on a global platform to over two hundred countries around the world. With mass media becoming an ever so powerful and influential medium in toady’s society, Olympic advertising and sponsorship is becoming as big as the games themselves. With investments that sponsors make reaching in the hundred million of dollars, some pose the question, is corporate sponsorship a financially sound investment? It is publicized by both sponsor companies and the IOC, that Olympic sponsorship enhances not only brand image and equity, but also ultimately yields financial benefits. With this in mind, how can a company actually go about accessing the value of return for the Olympics. The generated revenues resulting directly to Olympic sponsorships are had to specifically identify. By analyzing sponsorships with event study methodology, which is commonly used as an analysis tool in the finance discipline, a company can start to assess the market value of Olympic sponsorship, as seen from a marketplace perspective. The basic event study methodology essentially involves measuring how a certain event influences movement in particular stock prices. This study can judge if a particular type of event is seen as beneficial or detrimental to a firm’s value.
The results are then analyzed by statistical and logical means to determine assumptions that can be concluded about Olympic sponsorship. When analyzing the event study, in regards to the Olympics, many factors play an important role in influencing the results. Such strategies referred to as “ambush marketing” could consequently influence perspective of the event study. Ambush marketing is the direct attempt by competing firms are steeling away benefits that are traditionally reserved for the sponsored firm. Many ethical and moral arguments are analyzed to show how ambush marketing could be prevented.
Name: Bartell, Christopher
Date: Spring 2003
Major(s): Economics
Thesis Committee: S. Casler,
Title: Uninsured Americans and Economic Recessions
Abstract: Health insurance is a big topic on the tip of everyone’s tongues these days. Over the last twenty year the number of uninsured in the healthier industry has continuously been increasing at an absurd rate. Since the creation of Medicare and Medicaid in the 1960s, the government has provided affordable healthcare to the elderly and economically unfortunate; however, there has never been a national health plan in the United States and each year millions of Americans are added to the number of uninsured. Why is this? As the economy goes into recession, millions of Americans lose their jobs. The number one form of health insurance in this country is employer-based healthcare, so as Americans lose their jobs, they also lose their health insurance. The purpose of this study is to examine the uninsured in the healthcare industry along with unemployment caused by economic recessions and see if there is a direct relationship between the two. Theories will be created based on information from experts in the Healthcare field. Data will be analyzed and used to support or contradict the findings.
Name:Bonner, Greg
Date: Spring 2003
Major(s): Economics
Thesis Committee: S. Onyeiwu, D. Goldstein
Title: A Study in Capital Market Inefficiencies
Abstract: There have been controversies over whether or not capital markets are efficient. This project explores inefficiencies in the capital markets. It demonstrates that people are too irrational for the markets to be efficient. The paper discusses the ideas of equity and bond markets, risk and risk measurement, the relationship between risk and return, the idea of diversification, how the market has evolved over the last 100 years, how we keep track of the market as a whole, and the idea of market cycles. The project reviews some of the market theories and shows that Modern Portfolio Theory relies on an efficient market place. There are three studies that I did that show inefficiencies in the market. Market cycles were examined in relation to business cycles, asset allocation across the business cycles, and the market’s reaction to major world events. These studies show that the market has been inefficiencies and that human beings are too irrational to execute an efficient market place. The paper concludes that the government can take to help make the capital markets more efficient. The project also contends that better accounting standards will help make investors more rational. Furthermore, maintaining an expansion in the economy (without overproducing) will make the market more efficient.
Name:Carlson, Jessica
Date: Spring 2003
Major(s): Economics
Thesis Committee: S. Onyeiwu, J. Sickafuse
Title: Absorptive Capacity and Competitive Advantage: The Case of General Electric and Pfizer
Abstract: Technology plays an important role in the development of firms. In this ever-changing world there are signs of modern technology displayed everywhere. Cellular phones, computers, pagers, etc. are all examples of everyday items that reflect modern technologies. As long as the world continues to become more technological, so will corporations and industries. They must adapt to the new technologies and use them to their advantage. This paper discusses how firms utilize absorptive capacity and technological innovation to gain a competitive advantage. The paper focuses on the definition of absorptive capacity and how it can be used to strengthen the firm’s technological capability. The paper concludes that by acquiring absorptive capacity, a firm will gain competitive advantage and market leadership. A case study of General Electric and Pfizer demonstrates how firms obtain and utilize absorptive capacity.
Name:Cimoch, Rickie
Date: Spring 2003
Major(s): Economics
Thesis Committee: J. Sickafuse, D. Goldstein
Title: So What if College Athletes Do Not Get Paid? At Least They are Advancing Themselves Through a College Education That They Might Not Otherwise Have Had
Abstract: There are many important issues that the National Collegiate Athletic Association (NCAA) must deal with every year. One of the major issues that they have faced lately has been the debate over play for pay. While the NCAA does not currently pay players for their athletic abilities, many sportswriters, sports analysts, coaches, presidents of universities, and the players themselves feel that they should be paid. Others think that the players are already being given enough compensation by receiving a free college education. But regardless of what side holds a stronger argument, this paper shows how athletic scholarships provide huge economic advantages for student-athletes who are from poor socioeconomic backgrounds. It examines the situations of athletes before, during, and after their college careers and compares them to their pre-college peers. By looking at the advantages gained through a higher education, it is clear to see that student-athletes who are from disadvantaged backgrounds graduate at higher rates and have higher future job opportunities and higher future incomes than their economic peer group. So for these athletes who are from poorer socioeconomic backgrounds, it does not matter that they do not get paid to play. They are advancing themselves through a college education that they might not otherwise have had if it had not been for college athletics.
Name:DiGirolamo, Matthew
Date: Spring 2003
Major(s): Economics
Thesis Committee: A. Moskwa, J. Sickafuse
Title: A Study of the Impending Economic Impact of An Aging American Population: Change that Must Be Made For Our System of Elder Care to be Sustainable
Abstract: Our nation faces a major challenge when it cones to taking care of its older members of society. Constant advances in medical technology and longer life expectancies have caused an unprecedented number of senior citizens that require aid as they age. However, the aging services system that exists in America today is not sustainable for the future. Due to regulatory burdens, restrictions, and insufficient funding the current system is not prepared to provide for the needs of senior citizens. With an increasing number of Americans facing the dilemma of how to meet the needs of older Americans with chronic conditions and disabilities, now is the time to look for solutions and alternatives that will benefit both the current and future generations. I examined the causes of our aging population and the problems that will result from this aging. I then explain the forms of elder care available to older citizens today and how these services are paid for. Next, I did a case study of the detrimental effects recent governmental legislation has had on not-for-profit nursing facilities. My final conclusion is, in order to meet the increasing demand for elder care over the next 50 years, the government and elder care providers must make changes now. The government should consider paying down the federal debt, creating private retirement accounts, and modifying the Social Security system, while nursing facilities should increase the availability of home care.
Name: DiGirolamo, Stephen
Date: Spring 2003
Major(s): Economics
Thesis Committee: A. Moskwa, T. Nonnenmacher
Title: The Economic Impact of Section 201 Tariffs on the United States Steel Industry
Abstract: On March 6, 2002, the United States enacted a protective tariff for its domestic steel industry under Section 201 of the Trade Act of 1974. This tariff was the largest, most encompassing protection ever levied on behalf of the U.S. steel industry. This tariff is intended to save the dying steel industry in the U.S., which has been damaged extensively from steel dumping and other unfair trade practices used by foreign steel industries. This examination focuses on the effects of this tariff on the U.S. steel industry, and allows for the ultimate conclusion as to whether implementing this tariff was the right decision. After extensive research and testing, I arrived at a simple, but strong conclusion. One full year after the tariff was initiated, it is clear that the protection has run as predicted, and has not caused major unforeseen consequences to the U.S. economy. Ultimately, the U.S. steel industry has as a whole benefited from this protection and are in the beginning stages of a massive turnaround. For the domestic steel industry to become a thriving part of the U.S. economy again, it must take advantage of this protection period, and restructure its firms to be more competitive against foreign steel producers.
Name: Dopirak, Josh
Date: Spring 2003
Major(s): Economics
Thesis Committee:
Title: Achieving Profitability: HMOs 1970-1998
Abstract: None
Name:Dulski, Brian
Date: Spring 2003
Major(s): Economics
Thesis Committee: A. Baskan, D. Goldstein
Title: Is Banking System Reform in China the Key to Economic Growth?
Abstract: This paper examines the current state of Chinese banking system and attempts to determine what reforms, if any, are necessary for stability and economic growth. Modern central and commercial banking theory are examined and compared to the Chinese example. An empirical study was performed on the fast track economies of Central and Eastern Europe (Poland, Hungary, and the Czech Republic), to explore different approaches to banking system reform. The paper finds that many reforms of the Chinese banking system are in order if stability is to be ensured and the economy is to continue to grow.
Name: Duncan, Scotland
Date: Spring 2003
Major(s): Economics
Thesis Committee: E. Adams, A. Baskan
Title: Stock Market Volatility and Initial Margin Requirements: Should the Federal Reserve Return to an Active Margin Policy?
Abstract: In 1934 the Board of Governors of the Federal Reserve was granted the authority to control the margin requirement with the hope that timely changes would curb speculation and reduce stock market volatility. There have been several prior studies on the effect of margin changes on volatility, but no precise conclusion about a relationship or lack of relationship has been determined. In 1974 the Federal Reserve abandoned margin changes as a policy tool, but recently there have been some economists who have claimed that the Fed should return to an active policy. This study explores the relationship between volatility within two indices (Dow Jones Industrial Average and the S & P 500) and margin requirements. Daily returns from 1934-2000 were used in a least squares regression, as well as a statistical test comparing active pre-1974 policy to inactive post-1974 policy. Volatility was calculated using an annualized 21-day rolling standard deviation of returns, which is a simplified version of a much more complex Generalized Auto-Regressive Conditional Heterskedasticity (GARCH) model. The statistical significance of margin requirements as a means of limiting volatility in this study support a return to the active margin policy that the Federal Reserve demonstrated from 1934-1974.
Name: Emery, Alicia
Date: Spring 2003
Major(s): Economics
Thesis Committee: B. Afrasiabi, E. Adams
Title: The Economic Impact of Section 201 Tariffs on the United States Steel Industry
Abstract:Success in investing depends on style, what’s in and what’s out. No it is not the skirt length or this spring’s fashion color. It is what you have in your Investment Portfolio. Every portfolio manager has a stated investment style.
Most money managers recognize six distinct equity investment styles: large capitalization growth and value stocks, mid-capitalization growth and value stocks and small-capitalization growth and value stocks.
The second most important decision these investors must make is the selection of style. The selection of style effects the investment portfolio return more than any other decision other than asset allocation, the decision of being in stocks, bonds and/or cash as exhibited in University of Chicago student Harry Markowitz’s 1952 doctoral thesis which was the beginning of what is now known as Modern Portfolio Theory. Individual stock selection is third in performance impact.
Name:Fucci, Roxane
Date: Spring 2003
Major(s): Economics
Thesis Committee: S. Casler, D. Goldstein
Title: The Impact of the Tool and Die Sector on the Economy of Crawford County: A Statistical Study: 1977 – 2000
Abstract: The level of public interest in the tool and die industry as indicated by the number of related articles published in the local paper and Meadville’s interesting monikers such as “Tool City” and the “Tool and Die Capital of the World” led to the topic of this study.
After describing the historical emergence of the tool and die industry in Crawford County, I offer some current opinions on the state of the general manufacturing climate and its declining role in the economy. The theoretical basis of the study is primarily derived from Okun’s Law and the inverse relationship between the unemployment rate and output. A description of Okun’s original paper is followed by an explanation of theory modifications used in this paper. I discuss some of the problems involved in actually defining the tool and die industry and complications of all-inclusive statistical data collection.
With data from 1977 through 2000, I present several Ordinary Least Squares regressions of the relationship between the unemployment rate growth and the growth of output at the national, state, and county levels. There are several graphical comparisons of the regional differences in the actual unemployment rate, growth of the number of manufacturing jobs, and output from tool and die sectors. Two other regressions show the growth of the county’s unemployment rate and the growth of personal income in the county are dependent on the output from the national Fabricated Metals sector and the local Industrial Machines sector of the Tool and Die Industry.
I conclude that public opinion has a finger on the pulse of the local economy. The tool and die industry has a significant impact on the growth of the unemployment rate and the growth of personal income in Crawford County.
Name: Fusaro, Anthony
Date: Spring 2003
Major(s): Economics
Thesis Committee: J. Sickafuse, S. Onyeiwu
Title: An Economic Analysis of Competitive Imbalance in Major League Baseball
Abstract: Professional baseball hit some rough times following the player’s strike of 1994 that resulted in the cancellation of the playoffs and World Series. Fans stayed away from the game because they were fed up with owners and players fighting over millions of dollars. In an effort to win back fans owners of financially rich teams began spending outrageous amounts of money of player salaries to increase local fan support. But until the single season homerun record chase of Mark McGwire and Sammy Sosa fans did not respond to the owners attempts. Once fans were interested in baseball again the effects of this spending spree became apparent. The payroll gap between large market and small market teams had reached an all-time high. This payroll inequity was blamed as the cause of the competitive imbalance that baseball was suffering from. This issue of competitive imbalance was a major concern of both owners and players this past August when the new Collective Bargaining Agreement was signed at the deadline of another players strike. Measures included in the new CBA that were aimed at fighting competitive imbalance were increased revenue sharing and a refined luxury tax. This paper will examine whether or not these measures, or possibly others, will in fact combat competitive imbalance or if the cavernous gap that exists between owners and players will over power these possible solutions.
Name:Gearhart, Jonathan
Date: Spring 2003
Major(s): Economics
Thesis Committee: T. Nonnenmacher, S. Casler
Title: Analyzing The United States Energy Situation
Abstract: This paper analyzes the United States’ current energy situation. The histories of U.S. troubles with energy from 1970 onward are discussed. Two separate episodes of energy regulation are compared: imposing many regulations as was attempted by the Ford and Carter administrations, and letting market forces take effect, which was done by the Reagan administration. After analyzing both philosophies, I have concluded that a mix of government regulation needs to be enacted. To suggest on how this should be done, I have chosen to compare Paul Joskow’s Electricity Sectors in Transition with the most recent energy policy proposed by the administration of George W. Bush. These two analyses share three main foci; these are to promote competition, promote research and development, and to further protect the environment. I feel that these three issues should be the cornerstones behind any form of government efforts to restructure the energy sector.
Name:Hoy, Vanessa
Date: Spring 2003
Major(s): Economics
Thesis Committee: A. Baskan, B. Afrasiabi
Title: The Convergence Criteria of the European Union and its Effect on Economic Growth within the European Community.
Abstract: This project determines the economic effects of the convergence required by the European Union of countries interested in becoming Members of the Union. One of several treaties aimed at integrating the economies, was the Maastricht Treaty, signed in the Netherlands on February 7, 1992. It outlined three stages to provide a structure, which the European Union used to introduce a single currency, the Euro, in 1999. I have focused on the second stage, the period in which countries began economic convergence. By doing so, I was able to create a before and after scenario that I used to perform a regression analysis. I examined the effects of the fiscal policies and actions taken to meet the four convergence criteria established in the Maastricht Treaty. By looking at investment and employment figures before and after 1994, the beginning of the second stage, I was able to determine the effects of convergence. Looking at the Member States, France and Denmark in particular, I found significance of some effect on Denmark’s GDP and concluded that striving to meet the criteria actually had a negative impact on one country’s growth.
Name: Johnston, William
Date: Spring 2003
Major(s): Economics
Thesis Committee: T. Nonnenmacher, E. Adams
Title: Risk and Uncertainty in the Aftermath of September 11th
Abstract: September 11th changed the economy of the United States and placed a greater focus on risk and uncertainty. All firms have been forced to make changes in their business decisions, but these decisions will be specialized in accordance with how each firm was affected by September 11th. Theories of risk, uncertainty, economic crisis, game theory, information, technology, and insurance are all explained to give background for the changes taking place since the attacks. This study examines two firms in the banking industry, Mellon Financial and Citigroup, in the form of case studies. Planning and risk management are two important steps in reducing uncertainty and risk, especially in times of crisis. There is no protocol for a crisis as each is different and each firm is not equal. Both Mellon and Citigroup will encounter both similar and different risks and uncertainties as a result of the unforeseen terrorist attacks due to factors of location and services that they offer. Economic uncertainty and risk cannot be eliminated from any industry, but they can be contained and minimized. When dealing with risk and uncertainty, there are general methods that a firm can install to lessen the affects, but as each firm is unique, there is not one guaranteed path to successful risk management and recovery.
Name: Kiebler, Clint
Date: Spring 2003
Major(s): Economics
Thesis Committee: D. Goldstein, S. Casler
Title: Gambling: An Answer to Struggling Economies?
Abstract: The purpose of this senior comprehensive project is to analyze legalized casino gambling’s impact on local economies. The issue concerning gaming is a highly controversial subject, but noteworthy to analyze. Many states are hoping to achieve the same stature as Las Vegas and Atlantic City. This study is divided into three subsections. The second chapter is an empirical question concerning the issue of casino gambling. The multiplier effect is analyzed, as well as a number of factors influencing the multiplier. The third chapter is a case study illustrating the impact gambling has had on New Jersey residents, Atlantic City, and Atlantic County. The fourth chapter tries to answer the question of does adding a casino to a specific region really influence the overall economy. To do such an experiment, I tested whether or not adding casino gambling creates new jobs, and does it reduce the unemployment rate in the region in which it was added. It was performed by running two regressions that analyzed county change in employment and unemployment before and after the casino, as well as the change in the overall state levels. The final chapter sets the ground work for future research. With the ever increasing demand for internet options, online casinos have opened outside the United States. It has evolved into a huge industry that is leaking tremendous amounts of money away from the U.S
Name: Marcavitch, Philip
Date: Spring 2003
Major(s): Economics
Thesis Committee: D. Goldstein, S. Onyeiwu
Title: Paying Living Wages is Good Business: Why the Living Wage Works
Abstract: Since the beginning of classical economics, the belief has been that markets behave according to the rules of supply and demand, including the labor market. As such, employers believe that their employees are being paid exactly what they earn. In recent years, however, there has been much debate about the wages that low-wage workers receive. Out of this debate has risen a grassroots movement that focuses on paying workers a wage at least commensurate with the federal poverty line – a living wage. Since the living wage’s inception in Baltimore in 1994, many municipalities across America have implemented higher wages with very positive results, as evidenced in studies such as those by David Neumark. Because of these successes, the question arises of whether living wages would also succeed in private firms. Through analysis of profit margins, profit rates, return on equity and productivity figures, socially responsible firms like Ben & Jerry’s Homemade Holdings, Inc. can prove to be even more profitable after implementing a living wage. The results that come from public and private firms suggest that there may be an “alternative” labor market theory for low-wage workers or for the labor market as a whole.
Name: McGowan
Date: Spring 2003
Major(s): Economics
Thesis Committee: E. Adams, S. Casler
Title: Retirement Savings in the United States: The Use of Pension Plans to Prepare for the Future
Abstract: No Abstract.
Name: Miller, Matt
Date: Spring 2003
Major(s): Economics
Thesis Committee: E. Adams, J. Sickafuse
Title: The Protection of the U.S. Steel Industry
Abstract: The central idea of this paper is to analyze the current state of the U.S. steel industry in wake of current legislation that was passed in order to deal with low priced imports that have been hurting the domestic industry. This paper sets out to prove whether or not President Bush was within his legal rights in protecting the steel industry and to determine the possible consequences of protection. This will be done by examining the history of the steel industry in the United States and the role that government has played throughout this history. A case study on domestic steel producer, Weirton Steel Corp., will be examined in order to show a concrete example of what a domestic producer has gone through over the last several years and how the legislation has affected them. Also, this paper will examine the definition of dumping and how U.S. trade law deals with dumping. Lastly, this paper will conclude whether or not the President was within his rights and will observe some of the possible outcomes of his decisions.
Name: Morgan III, Frank
Date: Spring 2003
Major(s): Economics
Thesis Committee: J. Sickafuse, D. Goldstein
Title: Building MLB Stadiums: Have They Gone From Being A Competitive Advantage To A Competitive Necessity?
Abstract: This project explores whether or not building a Major League Baseball stadium went from being a competitive advantage to a competitive necessity. If a competitive advantage was gained, it also tries to determine what factors contributed to this advantage. Chapter one simply serves an in introduction. It discusses how the views and attitudes have changed over the past decade about single-sport stadiums. Long before the current facility craze, stadiums simply acted as a venue where games were played and often were shared by both a baseball and football team. However, as technology advances, stadiums have become a huge tool in allowing a team to significantly increase their total revenue. Chapter two presents an overview of what a competitive advantage and competitive necessity are. It also introduces factors that allow a team to gain a competitive advantage and whether or not this competitive advantage is sustainable. Being the first to build a new stadium, a team gains an advantage by becoming the first-mover into the market. However, stadiums are not an intangible resource and do not allow a team to maintain a sustainable competitive advantage. Because they are not sustainable, stadiums have become more of a necessity to a team, rather then an advantage. Chapter three is devoted strictly to a case study involving eight teams that have built a new stadium; four from the early 90s and four from the late 90s and early 00s. The empirical evidence being studied for all eight teams is total revenue, total revenue as a percentage of league average, team payroll, and team payroll as a percentage of league average, all in the five years surrounding a new stadium. The empirical tests developed suggest that building a new stadium did go from being a competitive advantage to a competitive necessity in Major League Baseball. Chapter four serves as a concluding chapter, which summarizes and interprets the findings of this project. It also recommends other research and tests that could be used to compile a more detail analysis.
Name:Natali, Christopher
Date: Spring 2003
Major(s): Economics
Thesis Committee: S. Onyeiwu, T. Nonnenmacher
Title: R&D as an Instrument For Success: Gaining Competitive Advantage in the Pharmaceutical Industry
Abstract: Despite the high costs and risk associated with the pharmaceutical industry, I contest that firms must continue to invest huge amounts of money in research and development (R&D) in the pursuit of innovation. I argue that despite the uncertainty and resulting risk that surrounds the innovative process, it is necessary for pharmaceutical firms to devote large amounts of money to their R&D departments in order to increase competitive advantage within the industry. Though factors other than R&D influence the pharmaceutical firm’s ability to gain competitive advantage, the goal of this paper is to evidence the importance of R&D expenditure. Included in the paper are a literature review, a case study of Pfizer Corporation, and a statistical analysis. The literature review discusses the innovation process, uncertainties and risks of the process, and the value of R&D in minimizing uncertainty and risk. The case study of Pfizer presents an overview of the company’s R&D spending, R&D strategy, and overall company performance. The data of this study illustrates a positive correlation between R&D spending and revenue performance. Statistical support for my thesis is achieved through the regression analysis. Using data from five of the top pharmaceutical companies, a panel regression is conducted that concludes a positive relationship between R&D spending and revenue. I conclude from my research that a well-funded and well-managed R&D department provides pharmaceutical companies with a valuable tool for success, and such companies should strive to maintain high levels of R&D spending.
Name:O’Connor, Kyle
Date: Spring 2003
Major(s): Economics
Thesis Committee: D.Goldstein, B. Afrasiabi
Title: Questioning Merger Enforcement: Adherence to the Horizontal Merger Guidelines
Abstract: In an attempt to standardize merger enforcement, the Department of Justice and the Federal Trade Commission issued versions of the Horizontal Merger Guidelines (HMG) in 1968, 1982, 1984, 1992, and 1997. The HMG are a roadmap for enforcement agencies to follow in their analysis of whether or not a merger will be anti-competitive. The HMG are based on economic theory of competition and this relationship—between economics and antitrust—has been thoroughly discussed by Bain (1956), Stigler (1966), and Posner (1992). However, critics question the influence of variables other than those discussed in the HMG on the agencies’ merger enforcement. Such variables include political influences. This paper attempts to analyze the impact of variables both intrinsic and extraneous to the HMG on the probability of a regulatory challenge with the development of a logit model. The model as a whole is significant in explanatory power and all parameters of HMG variables, including proxies for market concentration and entry analysis, significantly impact merger enforcement. Further, the model reveals a lack of independent significance and yet the presence of joint-significance for non-HMG variables. Overall the model shows merger guidelines being applied with an upward bias, resulting in a greater propensity to challenge. We attempt to dispel the notion that Washington is driving merger enforcement.
Name:Pero, Angela
Date: Spring 2003
Major(s): Economics
Thesis Committee: S. Onyeiwu, S. Casler
Title: The Importance of Technological Innovation for Competitive Advantage: A Case Study of General Electric and General Motors
Abstract: Investment in technological innovation is essential for firms to obtain competitive advantage in the marketplace. To prove this, I first perform a literature review which examines the importance of technological innovation in order for firms to compete in the 21st century. I then examine technological strategies used by large firms, focusing on General Electric and General Motors. In addition to this, a multiple regression analysis is used to determine the relationship between investment in technology, and the performance of firms. I also explore the crucial importance for firms within the United States to invest in technological innovation in order to compete globally. Clearly, the world has shifted from an industrial society to an informational society, and firms must invest in technology in order to compete.
Name: Rahimzadeh, Mansoreh
Date: Spring 2003
Major(s): Economics
Thesis Committee: E. Adams, S. Casler
Title: Women in the Workforce: Are they Discriminated Against?
Abstract: This senior comprehensive project proves that there exists a wage gap between men and women, specifically those who obtained master’s degrees. First a history of the social and economic changes of women in the labor market and the wage gap are discussed. Also presented in the introduction are the history of occupational segregation and the neoclassical theory of human capital. Finally, acts to diminish the wage gap and why they did not stop discrimination are talked about.
Trends in the labor market experience of men and women are analyzed next. This includes labor force participation rates of men and women with children, divorce rates and education rates. The human capital model shows how differences in tastes and preferences of men and women lead to investment in human capital. Birth rates, divorce rates, number of hours worked and earned degrees are all variables used to confirm that the wage gap exists. Lastly I looked at enrollment in the top business schools and formed the weighted average salary for both men and women after graduation. This study shows that wages are about equal right after school, but within a few years men’s salaries are significantly higher than women’s, proving discrimination against women in the workforce.
Name:Ramsay, Erin
Date: Spring 2003
Major(s): Economics
Thesis Committee: A. Baskan, S. Onyeiwu
Title: Fighting the HIV/AIDS epidemic in Sub-Saharan Africa through development and sustainable economic growth
Abstract: The effects of the global HIV/AIDS epidemic have hit sub-Saharan Africa the hardest. The poor economic state of this region has restricted the development of critical infrastructure necessary to diagnose and treat the epidemic. The poor economic state is a result of a number of factors including colonialism, neo-colonialism and the effects of external shocks in the global market. In order to fight the HIV/AIDS epidemic in sub-Saharan Africa self-sustainable economic growth must occur. The production function illustrates how factors of production like labor and technology can impact output. Manipulation of any one of these factors can lead to economic growth. Several models for developing sustainable growth have been proposed for sub-Saharan Africa. These models include the mainstream model, the basic needs/structuralist model, and the transforming institutionalist model. While different in approach the fundamental outcome of each model is the same: the development of a sustainable economy in sub-Saharan Africa to deter the HIV/AIDS epidemic. In addition to models for sustainable growth several foreign and domestic organizations have been established to aid sub-Saharan Africa. NEPAD is an example of a regional organization that is working towards a new Sub-Saharan Africa.
Name:Rapetti, Michael
Date: Spring 2003
Major(s): Economics
Thesis Committee: T. Nonnenmacher, A. Baskan
Title: An Analysis of the Determinants of Cartel Stability
Abstract: This paper analyzes the determinants of cartel stability through a Cournot perspective. The paper begins by pulling various hypotheses on cartel stability through Cournot models of duopoly and oligopoly. Through the models used, it is concluded that the ability to quickly detect and punish cheating may be the single most important determinant of whether or not a cartel will remain stable over time. The ability to effectively discover and punish cheaters lowers the time lag, thus decreasing the number of periods that the defector is able acquire the “cheater’s payoff.” The models also show the importance of preventing potential entrants from entering the market through methods such as creating barriers to entry and achieving economies of scale. It is almost impossible for firms to engage in cooperative activity without the ability to obtain and maintain a considerable market share. It is also shown through the use of Cournot models that! a cartel made up of fewer firms is more likely to remain stable over time than a cartel made up of many members. Lastly, through the theoretical models it is shown that cartels operating in an industry with a high elasticity of demand are less able to markup price over marginal cost. In the final chapter, these ideas are tested empirically through regression analysis and a case study of the American Railroad Cartel. A high market share, as well as the ability to raise price over marginal cost by 100% or more, are found to be significant variables in determining cartel stability. The latter shows that cheating may not actually be as much of a problem as it would appear from the various theoretical models. The number of firms in the cartel is not found to be a significant determinant of cartel stability. It is shown through the case study that there may be an optimal number of firms in the agreement that is not necessarily the smallest number of firms. It is also shown through the case study that the homogeneity of buyers, sellers, and products is necessary for a cartel to survive. It is shown that the cartel was able to detect and punish cheating so effectively that it was in no firms’ best interest to cheat on the agreement. Lastly, it is shown that the American Railroad Cartel remained so successful because of its ability to achieve marginal costs of production lower than any firm outside of the cartel. This efficiency was achieved through a state of the art transshipment technology.
Name:Rehner, Arthur
Date: Spring 2003
Major(s): Economics
Thesis Committee: T. Nonnenmacher, A. Baskan
Title: Hit or Miss: An Economic Analysis on the Market Efficiency of thePit.com
Abstract: This project is an attempt to test the market efficiency of thePit.com, the worlds only stock market for sport trading cards. The basis of the research came from data collected on thePit.com and eBay. The data was used to compare thePit.com to eBay since they both have the same trading cards for sale. The economic theories of arbitrage and the Law of One Price were used to interpret market efficiency. In addition to these two economic theories, hypothesis tests were done on the variance and mean selling price values. The conclusion from these economic analysis was that thePit.com was not a fully efficient market because there were violation to the two economic theories.
The final analysis was a regression analysis done to predict the changing price in trading cards. Using the baseball statistics homeruns, runs batted in, slugging percentage, and price the regression analysis gave the price that trading card should sell for using a hypothetical season. This efficiency test can not be fully interpreted until the baseball season actually starts and the players achieving their statistics. From the research completed, thePit.com’s claim on being an efficient market cannot be supported.
Name:Rhoades, Kirk
Date: Spring 2003
Major(s): Economics
Thesis Committee: B. Afrasiabi, E. Adams
Title: False Prophecies: Trend Spotting and the Efficient Market Hypothesis
Abstract: Each year, millions of people look to invest their savings into the stock market. Oftentimes, their money is given to investment professionals who claim that they can turn a high yearly profit for their clients by predicting which stocks will be winners or losers. According to the efficient market hypothesis (EMH), these claims made by investment professionals are false. The EMH claims that investment professionals can not turn a profit which would be higher than the profit obtained through a simple buy-and-hold strategy. This is true according to EMH, because the EMH holds that the movements of stock prices are random and completely unpredictable. In addition, the EMH concludes that investment professionals are spotting trends in the stock market where none exist. The EMH suggests two explanations for the existence of trend-spotting among investment professionals, the gambler’s fallacy and hot hand fallacy. The gambler’s fallacy is based on the assumption that an event which has not occurred for some time is “due” to occur. On the other hand, the hot hand fallacy assumes that a series of similar events occurring in succession are likely to be followed by similar events in the future, as in shooting a basketball. The EMH has raised much controversy among investment professionals, namely technical and fundamental analysts. In order to test EMH’s claims of trend-spotting, I have performed an experiment in which Allegheny students and faculty were subjected to a series of random and non-random data.
Name:Schwend, John
Date: Spring 2003
Major(s): Economics
Thesis Committee: T. Nonnenmacher, J. Sickafuse
Title: The Influence of Economic Factors on the American Amusement Industry
Abstract: Over the six years that I have been employed within the amusement industry, I have seen changes in quantities of visitors and the amount of money that they spend. Examining various economic factors that cause the amusement industry to grow is the purpose of the study. A brief history leads way into technological changes that draw customers into amusement parks. The different types of patrons that the parks attract are divided into three categories, and the characteristics of each demographic are explored. Statistical analysis is preformed on three economic variables that are believed to have a direct impact on spending in the amusement industry. The results are analyzed and are corrected for errors. Finally the study focuses on the next year to two years of growth for the industry. Reasons for future growth and concerns about the national economy are discussed and applied to the industry. Concluding remarks tie the study together and show its importance. All three sections are related to each other so that the reader will be able to get the overall image of growth in the industry
Name:Skrinjar, Gabriel
Date: Spring 2003
Major(s): Economics
Thesis Committee: D. Goldstein, S. Casler
Title: The Role of Greed in Corporate America: How Its Abuse Devastated the Economy
Abstract: Corporate America has been fraught with scandals over the past few years, which has caused the future of the economy to be extremely uncertain. The public attention that Enron received has revealed poor accounting practices, corner cutting, and unethical and fraudulent practices. An underlying vice that has led to the corruption of the Chief Financial Officers is greed.
This paper will take an in depth look at the role of greed and its involvement in the manifestation of the scandals. Excessive compensation packages, apathetic supervision by the board of directors and increased incentives allowed for misdeeds to occur. Consequently, America is in a hiring slump and shareholder confidence has declined. In order to correct these mistakes, policies need to be implemented to change the system from the top down by limiting the power of the top executives.
Name: Smith, Kyna
Date: Spring 2003
Major(s): Economics
Thesis Committee: S. Onyeiwu, S. Casler
Title: The Importance and Contribution of Human Resource Management to the Firm
Abstract: This project explores the use of Human Resource Management (HRM) as a strategy for competitive advantage. Noting the increasing significance of HRM in the business world, the study atempts to identify the connection between a good HRM program and corporate success. The paper also reviews the current and previous literature on HRM , and then presents the history of the subject and how it has become what it is today. After reviewing the models and theories of HRM, an analysis of some real world applications of HRM strategy was undertaken. The Dad’s PetCare Company in Meadville was used as a case study of a model of effective HRM. Finally, a multiple regression analysis was used to identify some of the significant determinants of effective HRM.
Name: Smith, Tyrrell
Date: Spring 2003
Major(s): Economics
Thesis Committee: S. Casler, A. Moskwa
Title: The Impact of the Public Assistance Program on the Economy
Abstract: This study concerns the impact of the public assistance program on the economy. The examination analyzes the causes for increases and decreases in welfare expenditures, explains why these changes occur, and how they affect the United States economy. The thesis focuses on two areas in particular: First the government’s side or the managerial portion explains how the economy is affected by welfare. Second the welfare recipient’s side is discussed including how they affect the economy through the decisions they make while under the program. The research shows that the recipient’s choices of whether to invest market time or not plays a big role on the decline or rise of welfare expenditures. It also shows that economic booms are mostly responsible for the recent declines in welfare expenditures, not the welfare reform that was instituted in 1996. The study concludes by discussing the importance of the existence of a public assistance program raising questions about the emergence of new economic problems in the future due to the massive decreases in the number of welfare recipients.
Name: Vallos, James
Date: Spring 2003
Major(s): Economics
Thesis Committee: S. Casler, A. Moskwa
Title: The Importance of Neoclassical Growth Factors to the Economic Success of East Asia
Abstract: Over the past several decades, the newly industrialized countries of East Asia have been able to achieve GDP growth rates that exceed virtually all other countries over the same period of time. These countries were able to accelerate past their peers to effectively catch up with the developed nations of the world. Scholars have been seeking an explanation for this phenomenon that is based on neoclassical growth theory. This study reviews neoclassical theory, in an effort to uncover the sources of these countries economic growth and to determine the most efficient ways for developing countries to allocate resources. Additionally, this study focuses the national policies and institutions that are most effective in stimulating the growth of technology, a central neoclassical growth factor.
Name: Walton, Joseph
Date: Spring 2003
Major(s): Economics
Thesis Committee: D. Goldstein, B. Afrasiabi
Title: Alternative Financing of Community Pools Through 501 C3 Charity
Abstract: All across America towns are shutting down community pols. This is in large part due to the lack of government funding and or the lack of public support. This can be seen as a vital resource to a community as an educational tool. The loss of this resource may lead to a growing population of children who lack the vital skills this resource provides.
This project will study a different method of financing that will offer communities an alliterative to the traditional financed model. This method of financing is in the form of a non-profit charity that raises funding privately and is separate from government control. These organizations are enabled under U.S. tax code 501 C3 to offer tax.
We will compare two case studies of both models to determine if a 501 C3 charity is a viable choice to the community. We will gauge this by analyzing community benefit gained by each model. We will hen set these studies wide by side and compare our results of community benefit. The underling question is, can a privately run charity provide an equal and or greater amount of community benefit compared to that of a publicly funded pool?
We will find that it can indeed provide the equal amount of community benefit. What we will also find is that this private non-profit charity can also provide the benefit of economic spillover in the community. This can be seen as an immeasurable benefit to the community. This non-profit organization holds the potential for new opportunities of economic activity.
We will conclude that both models work and can carry out their function. But we will also find that this alternative method of finance may hold great opportunity for communities. Communities in financial trouble may want to investigate this possible method of finance.
Name:Weber, Donald
Date: Spring 2003
Major(s): Economics
Thesis Committee: A. Baskan, E. Adams
Title: Do Financial Incentives from HMOs Affect Physician Behavior?
Abstract: This Senior Comprehensive Project investigates the affects that managed care organizations, such as HMOs, have had on physician behavior and the quality of care that is provided to patients. Financial incentives are the main tool used by HMOs to influence physician behavior in a more cost-conscious manner. A historical background of the topic is provided offering insights into benefits and drawbacks of Managed Care Organizations. Economic theories pertaining to the subject are also examined in order to determine how physicians might behave when faced with different financial incentives. Finally, prior economic studies are examined to determine if physician behavior is indeed influenced by incentives. I have concluded that many factors have the ability to influence the actions of physicians, but predictions of these actions are imprecise or inaccurate due to the varying priorities and circumstances of the physicians and patients involved.
Name:Wright, Andrew
Date: Spring 2003
Major(s): Economics
Thesis Committee: T. Nonnenmacher, S. Casler
Title: The Economic Implications a Collective Bargaining Agreement would have on Major League Soccer
Abstract: The thesis of this project is that a collective bargaining agreement would increase the economic viability of Major League Soccer (MLS) because it would increase the absolute level of quality on the field, which would lead to greater demand for the sport as a whole. I attempt to prove this by presenting the current situation MLS finds itself operating with respect to their league structure, market structure and collective bargaining approach. Throughout the work, it will be seen how a collective bargaining agreement would affect the different facets of the league. With respect to the league structure, competitive balance will remain, which is beneficial to the owners, and league-wide salaries will increase, which is beneficial to the players. In terms of the market structure, the prospect of increased salaries would increase the absolute level of quality in the league, leading to increased demand by the American public. An increased demand would also be beneficial to all parties involved because it would increase the revenues in the league, with increased revenues, profits could be made and other aspects of the league enhanced. A collective bargaining agreement that would grant the players with their demands would be beneficial to the players immediately, and the owners, who would have to sacrifice up-front costs, would benefit in the long run. In the end, a demonstration of how and why a collective bargaining agreement would be beneficial to the league as a whole is presented to reinforce my thesis.