Rationalizable implementation

We consider the implementation of social choice functions under complete information in rationalizable strategies. A strict version of the monotonicity condition introduced by Maskin is necessary under the solution concept of rationalizability. Assuming the social choice function is responsive, i.e. in distinct states it selects distinct outcomes, we show that strict Maskin monotonicity is also sufficient under a mild “no worst alternative” condition. In particular, no economic condition is required. We discuss how our results extend when the social choice function is not responsive.     

Intelligente Stromzähler und -netze: Versorger zögern mit neuen Angeboten

Without an intelligent energy network, the German government’s climate targets cannot be achieved. That’s because the development and supply to energy networks of renewable energies call for so-called “smart grids”. Smart meters are only the beginning here, and their installation has been mandatory in new buildings and as part of extensive renovations since the beginning of the year. The power suppliers expect that by 2020 most households in Germany will be fitted with smart meters. Yet the entire industry is generally behaving with some reluctance to driving forward the world of smart energy. These are the findings of the 2010 energy supplier industry compass, published by Steria Mummert Consulting in collaboration with the F.A.Z. Institute. The compass reports that although three quarters of companies plan to invest in new time- and load-variable rates by 2012, what they in fact offer are, in some cases, the cheapest possible solutions that just meet legal requirements. The reason for the suppliers’ reluctance: the great majority of companies are still not convinced about the benefits and economic efficiency of smart metering for their own business. Plus, they estimate that consumer demand over the coming years will be on the low side. Just eleven per cent of the directors of 100 supply companies questioned in the survey see smart metering as a suitable tool for achieving the German government’s climate targets.     

Profit Maximizing in Auctions of Public Goods

A profit-maximizing auctioneer can provide a public good to a group of agents. Each group member has a private value for the good being provided to the group. We investigate an auction mechanism where the auctioneer provides the good to the group only if the sum of their bids exceeds a reserve price declared previously by the auctioneer. For the two-bidder case with private values drawn from a uniform distribution we characterize the continuously differentiable symmetric equilibrium bidding functions for the agents, and we find the optimal reserve price for the auctioneer when such functions are used by the bidders. We also examine another interesting family of equilibrium bidding functions for this case, with a discrete number of possible bids, and show the relation (in the limit) to the differentiable bidding functions.     

Energiemarkt unter Hochspannung

The liberalisation of the German electricity market began ten years ago, yet many things have still not happened. About a hundred new companies have tried to bring movement into the industry, but very few have been successful. Now competition has arrived in the market and companies are facing a veritable revolution, aggravated especially by a raft of state regulatory measures. Over the next few years, departments of public works and local municipal power supply companies may disappear from the market altogether, or change their business models radically. Customers cannot look forward to price cuts, but they may nevertheless be able to save on electricity costs. That is because black-box electricity meters will be replaced by intelligent reading devices and skilled advice about reducing consumption. For many power suppliers this represents a new market to be tapped into. These are the results of a survey conducted by Steria Mummert Consulting and the F.A.Z. Institute amongst the top 100 energy suppliers in Germany.     

Geographic concentration of innovative activities in Germany

The geographic concentration of industries has attracted much attention in recent economic and geographic literature. One mechanism employed to explain the emergence and comparative advantage of industrial agglomerations is based on the relationship between industrial agglomeration and local knowledge production and diffusion, and the resulting innovation activities. This paper analyses this relationship by identifying geographic concentrations of innovation activities and examining different causes for the emergence of these concentrations. The paper applies different concentration measures to patent data for German regions. We analyse 43 technological fields separately to identify which of these technologies tend to cluster in geographic space. The results are discussed in light of theoretical predictions of why specific technological fields concentrate while others do not. These explanations include the concentration of industrial activities, the role of dominant firms, dependence on scientific knowledge, and local interactions.     

Taxes,female labour supply and household income: differences between the Netherlands and the Federal Republic of Germany

The article investigates the effect of taxes and social premiums on female labour supply and household income. A comparison is made between labour supply and household income between the Netherlands and the Federal Republic of Germany in 1992. A discrete choice model for labour supply is used in which taxes and social premiums are implicitly incorporated. As male labour supply is highly inelastic an individual, male chauvinist model is used. The estimated models are used to simulate the effect of the differences in the tax and social premium system on the differences in labour supply and income between both countries. The results indicate that labour force participation is higher the more individualized the system. The German system leads to a lower tax burden compared to the Dutch system. It is concluded that differences in the tax and social premium system between both countries have hardly any influence on the differences in the inequality of net household labour income. There is evidence that the German system leads to a slightly more unequal distribution of household income. It is also concluded that although the tax and social premium system does influence labour supply and income, it can be doubted whether these effects are substantial.     

Evidence on the cross-country transmission of monetary shocks

The international transmission of monetary shocks between the US and Canada is explored. Focusing on real variables such as consumption, investment, employment, and the bilateral trade balance, along with measures of US and Canadian money, the empirical analysis examines the impact of a monetary shock in one country on real activity in both countries. The long-run analysis provides evidence of cointegration among the variables and suggests that money plays an important role in the equilibrium relationships between the two countries. Variance decompositions and impulse response functions reveal interesting avenues of real transmission in the short run. The short-run analysis provides strong evidence that US monetary shocks affect real activity in both the USA and Canada. The analysis also indicates that Canadian monetary disturbances affect Canadian and US real activity, and that many of these effects are similar in magnitude to the effects of US monetary shocks. The importance of the nominal exchange-rate regime is also discussed.     

Flights and contagion—An empirical analysis of stock–bond correlations

This paper analyzes the existence of flights from stocks to bonds and vice versa. We propose a definition and a test for flight-to-quality, flight-from-quality and cross-asset contagion and examine their characteristics and effects for the financial system. The empirical analysis for eight developed countries including the US, the UK, Germany and Japan shows that flights exist and are a common feature in many crises episodes. Our findings also reveal that flights are not merely country-specific events but occur simultaneously across countries. This indicates that there is a link between the occurrence of flights and cross-country contagion. Moreover, we show that flights enhance the resiliency of the financial markets by providing diversification benefits in times when they are needed most.