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This chapter analyzes markets with an “infinite variety” of goods, such as large parts of the service economy and creative industries such as the book, film, and music market. I argue that the infinite variety of supply that characterizes such markets does not lead to discoordination, because of the emergence of cognitive institutions in the form of market categories, reference points such as exemplary goods, and instruments of interpretation which facilitate the (quality) coordination process. These cognitive institutions function as an extended mind of market participants and enable what is termed interpretative rationality, as distinct from calculative rationality. This interpretative rationality consists of the ability to recognize relevant differences and similarities between goods. These cognitive institutions, like the price system, are an emergent order which can be analyzed through the lens of Austrian economics. This chapter further demonstrates the potential convergence between particular strands of economic sociology and Austrian economics.

Intraday volatility characteristics throughout the trading week are examined at the emerging Borsa Istanbul (BIST) stock exchange. Using five-minute (and 15-minute) intervals, accentuated intraday volatility patterns at the microstructure level are examined during the stock market open and close in the morning and in the afternoon sessions. Volatility is highest when markets open in the morning. The second highest is during the afternoon open. The third highest is before the market closes for the day. Volatility before the market close has increased in recent years. These characteristics are seen every trading day. There are also differences: Monday returns are lowest, Friday returns are highest, and Monday morning volatility is highest of the entire trading week. Day-of-the-week and intraday accentuated volatility smile anomalies are jointly investigated using the longest intraday sample period in the emerging country stock exchange literature. Investment companies and professionals can utilize the results for risk management and hedging by avoiding highly volatile opening and closing periods. Arbitrageurs, speculators, and risk takers should trade during these highly volatile periods. Heightened volatility is increased difficulty in price discovery, thus inefficiency. Market participants, exchanges, and public prefer efficient markets. The research presents evidence of trading days, and periods during the trading day, when the exchange becomes more efficient. This is the first research that explores day-of-the-week effect from intraday volatility perspective in an emerging market, and provides useful recommendations in designing risk management strategies at market microstructure level.

This paper studies how a firm reacts to the threat from product market competition. Consistent with the strategic equilibrium model, we find that a firm increases investment in response to external product market threats. Further, the paper analyzes whether product market threats lead to an improvement in investment efficiency. When faced with product market competition, we find that firms that are otherwise likely to underinvest (overinvest) increase (increase) their investment significantly (less than the firms that are likely to underinvest) in the next period. However, firms that are predisposed to overinvest do not make cuts in capital expenditure, which indicates that strategic investment is a critical countermeasure for addressing competitive threats for all firms, their inclination to make suboptimal investment decisions notwithstanding. Overall, the evidence supports the predatory risk of waiting as well as competition and investment efficiency hypotheses. Additional tests suggest that product market threat partially substitutes for other external monitoring mechanisms designed to manage agency problems.

This chapter argues that the key Eurozone imbalances are not a failure of nation states. At the heart of the integration process is the convergence criteria – limits on government deficit, debt, interest rate, inflation, etc. While these were intended to eliminate asymmetries across countries, the conception of convergence was too narrow since the euro designers completely ignored the elephant in the room – that countries were on different technological frontiers. I show that this difference is an important determinant of the key macroeconomic imbalances across the Eurozone. It follows that the primary convergence criterion should be limits on non-price competitive gaps across countries. The chapter overturns the simplistic view of price competitiveness and illustrate that the regulating forces of competition originate from productive structures.

Albert Hirschman always distinguished himself by his unique approach in tackling economic problems, an approach that moved easily from literature and philosophy to political economy and social psychology, without ever losing sight of the real workings of social and political life.

The papers collected here stemmed from a desire to know more closely this rare economist who used the tools and features of one discipline to throw light upon those of another.

The methodological stance is the first element that emerges either explicitly or implicitly from this collection of papers: Hirschman’s suspicion of all-encompassing theories and their issue in encompassing plans – development plans in particular. His was a piecemeal approach targeting the scarcest of all factors, such as the ability to mobilize resources and to solve problems. This matched Hirschman’s own view that “petites idées,” to look at problems in the small, form the material for further observations and insights.

The second element that emerges from these papers is the richness of themes explored – from how to voice reasons for one’s disappointment and distrust to the role of countervailing passions in institutional development, from the “bias for hope” to the problem of inequality – but also the strong connections that exist among them. These connections revolve around the problem of economic change and its dynamics: how to explain it, how to promote it.

Yet, no matter which of Hirschman’s works we pick up for the first time or rediscover, we cannot avoid seeing that besides the scientist with his microscopic lenses, there is also the artist who looks at problems not for the final truth they might hide or the definite solution, but to make us aware of them, to open our eyes to curiosity and wonder. This is a difficult lesson, but not one Hirschman will let us forget.

Social media networks make their services freely available to all users. Users pay for the service received with the time and attention taken by the advertisements. This chapter argues that social media platforms are a unique form of monopoly driven by “the more the merrier” effect (i.e., network effects) in users' consumption. These monopolies exercise market power, not by charging higher prices to users but by “tying” larger amounts of advertising to their content. Traditional antitrust instruments designed to address excessive pricing and reduced output by monopolies need to be reframed to tame the attention economy problems in the social media industry. This chapter discusses five antitrust instruments grouped in three categories: structural, behavioral, and market-based remedies. Market-based solutions are the least explored in the literature, despite being the most promising instruments to lower the attention costs imposed on users, while preserving the economies of scope in production and the network effects in consumption, and possibly maintaining free access to social media, as we know it today.