Coordinating on lower prices: pharmaceutical pricing under political pressure

We investigate the effects of political activity on pharmaceutical prices, focusing on the health care reform period in the early 1990s.We characterize firms based on their vulnerability to future price regulation and find that the more vulnerable firms were more likely to take various actions to forestall regulation, most notably coordinating on a specific percentage price increase during 1993. Since moderating price increases could have averted regulation, the coordination appears to be the industry's response to a collective action problem.     

Environmental policy incentives to adopt advanced abatement technology:: Will the true ranking please stand up?

We investigate incentives through environmental policy instruments to adopt advanced abatement technology. First, we study the case where the regulator makes long-term commitments to policy levels and does not anticipate arrival of new technology. We show that taxes provide stronger incentives than permits, auctioned and free permits offer identical incentives, and standards may give stronger incentives than permits. Second, we investigate scenarios where the regulator anticipates new technologies. We show that with taxes and permits the regulator can induce first-best outcomes if he moves after firms have invested, whereas this does not always hold if he moves first.     

Efficiency effects of tax deductions for work-related expenses

This paper studies the efficiency effects of granting deductions for work-related expenses. It is shown that much depends on whether the expenses are required for increasing taxable income and on whether the expenses are social costs. Among the noteworthy results are the following. Expenses for commuting should be taxed rather than granted deduction, as the increasing effect of commuting on taxable income is doubtful. Deductions for private costs such as expenses for housework and child care may turn out to be allocationally neutral. If they are not neutral, however, the efficient degree of deduction depends on relative labor supply elasticities. JEL Classification H21 · H24     

Steuerreform in den USA

Donald Trump has announced a historic tax reform, and the expectation is that the Destination-Based Cash-Flow Tax will be the blueprint. Besides having beneficial effects on investment, this tax is suspected of having strong protectionist effects on trade. In this article, the latter concern is challenged. The US would only copy a reform Germany has already implemented in 2007.     

Europa am Scheideweg — ein Vorschlag zur politischen Weiterentwicklung

The European Union is approaching a point where it has to decide between two options: deepening political integration or reducing it. Economists tend to be sceptical. Many would prefer to reduce the scale of integration while returning more competences to member states. The debate, though, lacks a plausible vision for the path forward. Every stable currency union needs some kind of transfer mechanism. Once this notion is accepted, the installation of a “real” European Parliament with the power to raise taxes, particularly on capital income, should be considered.     

To Trust or to Control: Informal Value Transfer Systems and Computational Analysis in Institutional Economics

This article illustrates the usefulness of computational methods for the investigation of institutions. As an example, we use a computational agent-based model to study the role of general trust and social control in informal value transfer systems (IVTS). We find that the terms of interaction between general trust and social control have an impact on how IVTS work, become stable, and prove highly effective. The case shows how computational models may help (i) to operationalize institutional theory and to clarify the functioning of institutions; (ii) to test the logical consistency of alternative hypotheses about institutions; and (iii) to relate institutionalist theory with other paradigms and to practice an interested pluralism.