Income Shifting within a Dual Income Tax System: Evidence from the Finnish Tax Reform of 1993*

Dual income tax systems can suffer from income that shifts from progressively taxed labour income to capital income, which is taxed at a lower, flat rate. This paper empirically examines the 1993 Finnish dual income tax reform, which radically reduced the marginal tax rates on capital income for some, but not all, taxpayers. We measure how overall taxable income and the relative shares of capital income and labour income reacted to the reform. We find that the reform led to a small positive impact on overall taxable income, but part of the positive response was probably offset by income shifting among the self‐employed.     

An integrative framework for sustainability evaluation in tourism: applying the framework to tourism product development in Finnish Lapland

The adoption of sustainable practices has become widespread in tourism and has led to the proliferation of sustainability evaluation tools. They focus mainly on measuring outcomes, making scientific expertise an essential part of evaluations. This study argues that involving stakeholders throughout the evaluation process is essential if evaluation is to play a role in promoting the necessary understanding of sustainability to address the ecological and social concerns within a tourism setting. Drawing upon multi-stakeholder thinking, ethics, the Bellagio Principles and action research, this paper introduces a theoretical and methodological framework for engaging tourism organisations in collaboration with stakeholders in planning and implementing sustainability evaluations. The application of the framework is illustrated using a study of tourism product development, involving a group of eight craft-based entrepreneurs and their stakeholders in Finnish Lapland. A focus is placed on using ethical theories to promote dialogue and critical reflection and to expose the plurality of moral orientations behind the multiple views of sustainable tourism. Through discourse analysis, four moral discourses, ethical egoism, utilitarianism, deontology and virtue ethics, are constructed and examined. The paper shows how each influences the various ways in which stakeholders perceive sustainable tourism and the practical outcomes of the process.     

Contracting in dynamic games

We study the bargaining problem in the dynamic framework. The classical way of solving a dynamic bargaining problem is to transform the extensive form game into the normal form and then apply the theory of bargaining well developed for normal form games. This means that the parties sign a binding contract in the beginning of the game which defines their actions for the full duration of the game. In this article, we consider the setting where the players monitor the contract as the game evolves. The main purpose of the article is to study conditions under which the players do not have a rationale to renegotiate a new contract at any intermediate time period; i.e., the contract is time consistent. Time consistency restricts the set of bargaining solutions in dynamic games. We will show that time consistency of the contract is guaranteed if the bargaining solution satisfies the controversial independence-of-irrelevant-alternatives property.     

Income Tax, Commodity Tax and Environmental Policy

Using the self-selection approach to tax analysis, thepaper analyses the impact of environmental externalities on Pareto-efficientnon-linear income tax, proportional commodity taxes and publicexpenditure. Consideration of externalities within this frameworkreveals intuitive insights into environmental tax policy, suggestingthat some earlier conclusions drawn in the relevant literaturemight be misleading. The results indicate that, while the externalitysdirect harmful impact raises marginal tax rates, the influencethrough the self-selection constraint tends to decrease the rise.We also derive conditions under which the Pigovian tax can bedetermined purely on the basis of internalizing the externality.     

Biosecurity in agriculture: an economic analysis of coexistence of professional and hobby production*

One component of biosecurity is protection against invasive alien species, which are one of the most important threats worldwide to native biodiversity and economic profitability in various sectors, including agriculture. However, agricultural producers are not homogeneous. They may have different objectives and priorities, use different technologies, and occupy heterogeneous parcels of land. If the producers differ in terms of their attitude towards invasive pests and the damages they cause, there are probably external effects in the form of pest spread impacts and subsequent damages caused. We study such impacts in the case of two producer types: profit‐seeking professional producers and utility‐seeking hobby producers. We show that the hobby producer, having first set a breeding ground for the pest, under‐invests in pest control. We also discuss potential policy instruments to correct this market failure and highlight the importance of considering different stakeholders and their heterogeneous incentives when designing policies to control invasive alien species.     

The roles of electricity and ICT in economic growth: Case Finland

A quantitative look is taken at electricity and ICT as the engines of economic growth in Finland which was one of the leading countries in the electrification of mechanical drive in industry and which today is one of the leading information societies. It is shown that ICT’s contribution to GDP growth in 1990-2004 was three times as large as electricity’s contribution in 1920-1938. The improvement of multi-factor productivity in production accounted for 60% of ICT’s contribution but only one third of electricity’s. Electricity’s growth contribution was smaller but ICT’s larger than in the United States.     

Mobile banking: A powerful new marketing and CRM tool for financial services companies all over Europe

In the last decade mobile handsets have become ubiquitous. There are three times as many mobile phone users as online PCs and they are becoming very sophisticated and demanding users. Increasingly they will expect real-time information and access 24 hours a day, seven days a week, wherever they are in the world — and they want very high levels of service. This paper looks at how and why financial organisations across Europe are beginning to take advantage of mobile services and in particular mobile banking as a powerful new marketing tool to build long-lasting and mutually rewarding relationships with new and existing customers. Examples show how European financial organisations are using mobile banking to improve their customer service and relationships, to reinforce their brand by literally placing it in their customer's pocket and to reduce their costs.