A Test of Strategic Trade Policy in the Semiconductor Industry: The Impact of Japanese Policy on U.S. Firms

This paper analyzes a multinational corporation that may use tax evasion and profit shifting as a means to minimize tax liabilities. Our main finding is that profit shifting may occur even when tax rates are the same across countries. This will be the case whenever there is a tax differential in effective tax rates resulting from differences in tax enforcement. In this context, profit shifting occurs to enable tax evasion in a country where tax enforcement is less harsh. Moreover, for a given differential in tax rates, differences in tax enforcement may either accentuate or dampen profit shifting. Importantly, the predictions regarding the direction of profit shifting that would result in our set-up may contrast sharply with those of the preceding literature.     

Optimal asset taxes in financial markets with aggregate uncertainty

This paper studies Pareto-optimal risk-sharing arrangements in a private information economy with aggregate uncertainty and ex ante heterogeneous agents. I show how to implement Pareto optima as equilibria when agents can trade claims to consumption contingent on aggregate shocks in financial markets. The first result is that if aggregate and idiosyncratic shocks are independent, the implementation of optimal allocations does not require any interventions in financial markets. This result can be extended to dynamic settings in the sense that, in this case, only savings need to be distorted, but not trades in financial markets. Second, I characterize optimal trading distortions in financial markets when aggregate and idiosyncratic shocks are not independent. In this case, optimal asset taxes must be higher for those securities that pay out in aggregate states in which consumption is more volatile. For instance, this can provide an efficiency justification for the frequently observed differential tax treatment of different asset classes, such as debt and equity claims.     

Spatial patterns of biodiversity conservation in a multiregional general equilibrium model

Migration dynamics and local biodiversity are interrelated in a way that is likely to affect patterns of regional specialisation. We assess this relationship with a New Economic Geography model that has been extended with biodiversity. Biodiversity is heterogeneous, and responds to habitat availability. The results indicate that a symmetric pattern of regional specialisation is more likely, and that additional equilibria may emerge as the marginal utility of biodiversity increases. In the policy analysis we focus on the case where the overall social optimum is symmetric and show that it can be supported as a non-cooperative Nash equilibrium. However, multiple Nash equilibria may exist.     

Information Sharing in Contests

We study the incentives to share private information ahead of contests, such as markets with promotional competition, procurement contests, or research and development (R&D). We consider the cases where firms have (i) independent values and (ii) common values of winning the contest. In both cases, when decisions to share information are made independently, sharing information is strictly dominated. With independent values, an industry‐wide agreement to share information can arise in equilibrium. Expected effort is lower with than without information sharing. With common values, an industry‐wide agreement to share information never arises in equilibrium. Expected effort is higher with than without information sharing.     

From fork to farm: Impacts of more sustainable diets in the EU-27 on the agricultural sector

The implications of dietary changes for the environment and for human health are well documented, but the impacts on the agricultural sector are less well researched. We fill this gap by specifying scenarios in which European consumers' diets approximate the EAT-Lancet dietary recommendations to varying degrees and estimate the effects on agricultural production, incomes and emissions using an agro-economic modelling framework. The combination of different models allows for a detailed assessment of consequences for the agricultural sector from the global through European NUTS2 level to the farm level at different time scales. Shifting European consumption towards the EAT-Lancet recommendations leads to decreasing production of animal-based products, while production of fruits and vegetables increases sharply. The results indicate that the agricultural sector could benefit from a dietary shift, though the results are mixed at country, regional and farm levels. In particular, countries and regions that are highly specialised in animal farming are likely to lose income—at least in the short run—while regions with higher shares of vegetable and fruit farms can expect income gains. In Germany, pig and poultry farms may experience losses of up to 34% of their income, whereas farms with a high share of vegetables could gain more than 30% in income. Our results have implications for the policies to assist these extensive structural adjustments in response to widespread dietary changes.     

Estimating aggregate autoregressive processes when only macro data are available

The aggregation of individual random AR(1) models generally leads to an AR(∞$\infty$) process. We provide two consistent estimators of aggregate dynamics based on either a parametric regression or a minimum distance approach for use when only macro data are available. Notably, both estimators allow us to recover some moments of the cross-sectional distribution of the autoregressive parameter. Both estimators perform very well in our Monte-Carlo experiment, even with finite samples.     

Taxation and Market Power

We analyze the incidence and welfare effects of unit sales tax increases in experimental monopoly and Bertrand markets. We find, in line with economic theory, that firms with no market power are able to shift a high share of the tax burden to consumers, independent of whether buyers are automated or human players. In monopoly markets, a monopolist bears a large share of the burden of a tax increase. With human buyers, however, this share is smaller than with automated buyers, as the presence of human buyers constrains the pricing behaviour of a monopolist. Several control treatments corroborate this finding.     

Course Allocation via Stable Matching

The allocation of students to courses is a wide-spread and repeated task in higher education, often accomplished by a simple first-come first-served (FCFS) procedure. FCFS is neither stable nor strategy-proof, however. The Nobel Prize in Economic Sciences was awarded to Al Roth and Lloyd Shapley for their work on the theory of stable allocations. This theory was influential in many areas, but found surprisingly little application in course allocation as of yet. In this paper, different approaches for course allocation with a focus on appropriate stable matching mechanisms are surveyed. Two such mechanisms are discussed in more detail, the Gale-Shapley student optimal stable mechanism (SOSM) and the efficiency adjusted deferred acceptance mechanism (EADAM). EADAM can be seen as a fundamental recent contribution which recovers efficiency losses from SOSM at the expense of strategy-proofness. In addition to these two important mechanisms, a survey of recent extensions with respect to the assignment of schedules of courses rather than individual courses is provided. The survey of the theoretical literature is complemented with results of a field experiment, which help understand the benefits of stable matching mechanisms in course allocation applications.     

Antecedents of M&A success: The role of strategic complementarity,cultural fit,and degree and speed of integration

In this paper, we develop a comprehensive model of M&A success. We integrate fundamental constructs of different schools and discuss their interdependencies with M&A success. Our theoretical framework was tested empirically across a sample of 106 SME transactions in the machinery, electronic, and logistic industries in the German‐speaking part of Central Europe. The results of our study support the demand for an integrative perspective and theory on M&A. M&A success is a function of strategic complementarity, cultural fit, and the degree of integration. Strategic complementarity also positively influences cultural fit and the degree of integration. Cultural fit positively influences M&A success, but surprisingly has a negative impact on the speed and degree of integration. The degree of integration is positively related to speed of integration. Copyright © 2013 John Wiley & Sons, Ltd.