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on Regulation |
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Issue of 2006‒07‒15
eight papers chosen by Christian Calmes Universite du Quebec en Outaouais, Canada |
| By: | Andersson, Henrik (VTI) |
| Abstract: | We examine how WTP for a reduction in road-mortality risk varies with different individual characteristics and how subjective mortality-risk estimates differ from objective (statistical) mortality-risk values. Using data from a Swedish contingent valuation study, we find some support that WTP declines with age and background risk, but we find no support that WTP varies with health status. Further, we find that respondents underassess their own mortality risks, both road- and total-mortality risks, compared to the objective risk measures for Sweden at the time of the survey. |
| Keywords: | age; background risk; contingent valuation; health status; willingness to pay; risk perception; road safety |
| JEL: | C51 D61 J28 |
| Date: | 2006–07–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:vtiwps:2006_005&r=reg |
| By: | Alex Cobham (QEH) |
| Abstract: | Domestic revenue mobilisation is key to sustainable development finance - only self-sufficiency will allow the development of fully-functioning states with flourishing systems of political representation and economies reflecting societies' expressed preferences in regard to, for example, inequality. Tax evasion and tax avoidance are important insofar as they affect both the volume and nature of government finances. This paper estimates the total cost to developing countries of these leakages as US$385 billion annually, dwarfing any potential increase in aid. An additional result suggests that doubling aid to low income countries may have little positive revenue effect but damage the strength of political representation, if full trade liberalisation is simultaneously required. |
| URL: | http://d.repec.org/n?u=RePEc:qeh:qehwps:qehwps129&r=reg |
| By: | Patricia McGrath; ; |
| Abstract: | The Czech Republic, Hungary and Poland all experienced an initial reduction in the number of industries and an increase in unemployment, once they moved to a market driven economy. Over time the unemployment problem reduced in significance though Poland still experiences high levels to date. Industries sprung up in the private sector in all three countries which counterbalanced the drop in state enterprises. Private sector industries all reported easy access to credit once the business set up while firms with head offices overseas tended to use the home country for borrowing purposes. For these companies, the most significant feature of financial deregulation in the Czech Republic, Hungary and Poland was that of freedom of capital movement, which increased both the level of business and investment opportunities. Results show that financial deregulation led to industrial development in all three countries. Tests to indicate the impact of industrial production on economic growth, show that for the three countries industrial production caused economic growth. This was a uni-directional causality. |
| Keywords: | Transition Economies, Industrial Development, Financial Deregulation, Economic Growth, Eastern Europe |
| JEL: | E E23 F43 |
| Date: | 2006–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2006-818&r=reg |
| By: | John Bennett; Saul Estrin; |
| Abstract: | We model entry by entrepreneurs into new markets in developing economies with regulatory barriers in the form of licence fees and bureaucratic delay. Because laissez faire leads to ‘excessive’ entry, a licence fee can increase welfare by discouraging entry. However, in the presence of a licence fee, bureaucratic delay creates a strategic opportunity, which can result in both greater entry by first movers and a higher steady-state number of firms. Delay also leads to speculation, with entrepreneurs taking out licences to obtain the option of immediate entry if they later observe the industry to be profitable enough. |
| Keywords: | Entry, Entry Barriers, Developing Economy. |
| JEL: | L15 O14 |
| Date: | 2006–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2006-824&r=reg |
| By: | JOhn Bennett; Saul Estrin; |
| Abstract: | We address the impact of corruption in a developing economy in the context of an empirically relevant hold-up problem - when a foreign firm sinks an investment to provide infrastructure services. We focus on the structure of the economy’s bureaucracy, which can be centralized or decentralized, and characterize the ‘corruptibility’ of bureaucrats in each case. Results are explained in terms of the noninternalization, under decentralization, of the ‘bribe externality’ and the ‘price externality.’ In welfare terms, decentralization is favoured, relatively speaking, if the tax system is less inefficient, funding is less tight, bureaucrats are less venal, or compensation for expropriation is ungenerous. |
| Keywords: | Corruption, Bureaucratic Structure, Developing Economy |
| JEL: | D73 H11 H77 |
| Date: | 2006–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2006-825&r=reg |
| By: | christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn) |
| Abstract: | Traditionally, there have been two separate telecommunications networks, one based on switches, the other based on routers. The switched network basically carried voice. The packet switched network basically carried data. Now voice is about to go packet switched too. Ultimately, both networks might merge. If that were to happen, the governance structure of either of these networks would have to change fundamentally. Currently, a large amount of packet switched traffic goes over the public Internet. The Internet is organised as a club good. There is an access fee, but no further fee for its actual use. Volume metering is technically feasible, but typically only bandwidth is controlled. In the switched network, a split price is standard. There is an access fee, plus a separate fee for each call. In a club good, by definition each side pays for part of the traffic. On the Internet, the receiver pays principle is thus applied. In most countries, the switched network is governed by the caller pays principle. Under that principle, there are termination charges. Each operator has a local monopoly over its customers. There is thus the possibility that telephony will in the future be controlled by the same principles. Actually, in that case the only remaining property right would be access to the network. In the opposite case, data traffic might be contaminated by the principles currently governing switched telephony. This would presuppose that operators succeed in introducing artificial property rights for the relationship with their customers, maybe even for the individual instance of communication. Technically, there are two main opportunities for this. In switched telephony, for technical reasons it is natural to give out telephone numbers to operators, not to clients. Through these numbers, they control their customers. Voice over IP operators try to implement the same scheme for packet switched voice traffic, although here the domain name system would be natural. Domains are accorded to end users, not to operators. A second conduit for artificially introducing property rights is technical standards. They are needed for defining addressees, for the management of real-time interaction, and for the digital coding of voice signals. By way of proprietary standards, the operator gains full control. Competition policy should not only see at the establishment of these fundamental governance structures. It should also check the potential for distorting systems competition between switched and packet switched telephony. Incumbents are having a host of potential strategies for creating new barriers to entry, and for distorting actual competition. Most critical are bundling strategies. Diagonally integrated incumbents might offer their clients to carry their traffic over IP where possible, and through their traditional network otherwise. That way they could turn their customer base in the traditional networks into a barrier to entry. Currently, this strategy can fully work for mobile telephony. In fixed telephony it is more difficult to implement as long as IP addressees are not earmarked. |
| Keywords: | property right, club good, network externality, monopolistic competition, systems competition, packet switched telephony, network access, E. 164 numbers vs. IP addresses, caller pays principle vs. receiver pays principle, sip, codecs |
| JEL: | D D43 H41 K21 K23 L13 L15 L43 L86 |
| Date: | 2005–12 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2005_26&r=reg |
| By: | Kira Boerner (Department of Economics, University of Munich, Gebelestr. 13, 81679 Munich, Tel: +49 89 980970, Fax: +49 89 2180 2767, kira@dr-boerner.de); Christa Hainz (Department of Economics, University of Munich, Akademiestr. 1/III, 80799 Munich, Tel.: +49 89 2180 3232, Fax.: +49 89 2180 2767, christa.hainz@lrz.uni-muenchen.de.) |
| Abstract: | In many developing countries, we observe rather high levels of corruption. This is surprising from a political economy perspective, as the majority of people generally suffers from high corruption levels. We explain why citizens do not exert enough political pressure to reduce corruption if financial institutions are missing. Our model is based on the fact that corrupt officials have to pay entry fees to get lucrative positions. The mode of financing this entry fee determines the distribution of the rents from corruption. In a probabilistic voting model, we show that a lack of financial institutions can lead to more corruption as more voters are part of the corrupt system. Thus, the economic system has an effect on political outcomes. Well-functioning financial institutions, in turn, can increase the political support for anti-corruption measures. |
| Keywords: | Corruption, Financial Markets, Institutions, Development, Voting |
| JEL: | D73 D72 O17 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:135&r=reg |
| By: | Tomaso Duso (Wissenschaftszentrum Berlin für Sozialforschung (WZB), Reichpietschufer 50, D10785 Berlin, Germany. Tel: +49 30 25491 403, Fax: +49 30 25491 444, duso@wz-berlin.de); Klaus Gugler (University of Vienna, klaus.gugler@univie.ac.at); Burcin Yurtoglu (University of Vienna, burcin.yurtoglu@univie.ac.at) |
| Abstract: | This paper applies a novel methodology to a unique dataset of large concentrations during the period 1990-2002 to assess merger control’s effectiveness. By using data gathered from several sources and employing different evaluation techniques, we analyze the economic effects of the European Commission’s (EC) merger control decisions and distinguish between blockings, clearances with commitments (either behavioral or structural), and outright clearances. We run an event study on merging and rival firms’ stocks to quantify the profitability effects of mergers and merger control decisions. We back up our results and methodology by using alternative measures for the merger’s profitability effects based on balance sheet data and obtain consistent results. Our findings suggest that outright blockings solve the competitive problems generated by the merger. Remedies are not always effective in solving the market power concerns, at least not on average. Nevertheless, both structural (divestitures) and behavioral remedies do help restore effective competition when correctly applied to anticompetitive mergers during the first investigation phase. Yet, they are on the whole ineffective or even detrimental when applied after the second investigation phase. Finally, remedies - especially behavioral ones - seem to constitute a rent transfer from merging firms to rivals when mistakenly applied to pro-competitive mergers. |
| Keywords: | Mergers, Merger Control, Remedies, European Commission, Event Studies, Expost Evaluation |
| JEL: | L4 K21 G34 C2 L2 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:153&r=reg |