Agglomeration economies with consistent productivity estimates

This paper investigates the relative impact of microeconomic agglomeration mechanisms on plant's total factor productivity (TFP) using German establishment and employment-level data. Contrasting different strategies for estimating TFP from plant-level production functions reveals that unobserved output prices bias true productivity and lead to underestimated agglomeration economies. With the corrected TFP measure, the largest impact is found for labor market pooling, which is captured by the correlation of the occupational composition between one county-industry and the rest of the county. This main result is robust, even when the spatial units are resized from counties to larger labor market regions. Input linkages appear to be relevant only at this larger regional scale. Overall, agglomeration economies differ substantially across industries. Only for a subset of industries, some positive evidence is detected for knowledge spillovers.     

Retail fairness: Exploring consumer perceptions of fairness towards retailers’ marketing tactics

The concept of fairness has received great attention in consumer behavior research lately. However, the focus of these studies has mainly been the understanding of fairness in terms of pricing rather than exploring the consumers’ perceptions of fairness itself. This study explores the consumers’ perceptions of fairness as an outcome of a retailer’s marketing tactics. Based on 36 in-depth interviews this study submits a conceptualization of retail fairness from the consumers’ point-of-view. The concept of retail fairness constitutes of three dimensions and nine sub-dimensions, expanding our knowledge of the construct. The study posits a crucial link between increased honesty, ethical, and moral behavior and the understanding of retail fairness. Theoretical and managerial implications are discussed.     

Parents’ performance in entrepreneurship as a “double-edged sword” for the intergenerational transmission of entrepreneurship

We investigate how perceived parents’ performance in entrepreneurship (PPE) affects the entrepreneurial career intentions of offspring. We argue that while perceived PPE enhances offspring’s perceived entrepreneurial desirability and feasibility because of exposure mechanisms, it inhibits the translation of both desirability and feasibility perceptions into entrepreneurial career intentions due to upward social comparison mechanisms. Thus, perceived PPE acts as a double-edged sword for the intergenerational transmission of entrepreneurship. Our predictions are tested and confirmed on a sample of 21,895 individuals from 33 countries. This study advances the literature on intergenerational transmission of entrepreneurship by providing a foundation for understanding the social psychological conditions necessary for such transmission to occur.     

Explaining the size differences of exporter premia: theory and evidence

Two decades of research have established pronounced exporter productivity premia (EPP) and exporter size premia (ESP). Yet, we do not know why such exporter premia differ so widely in magnitude across countries or sectors? We take this question to the theory and to the data. We derive the sectoral EPP and ESP in a standard heterogeneous firms trade model and apply the insights from the model to guide our empirical investigation of detailed Danish firm-level data. We show that a significant share of the observed variation in EPP and ESP across sectors can be accounted for by sector differences in the underlying variation in productivity dispersion, variable trade costs, the ratio of fixed export costs to fixed costs of production, and the elasticity of demand.     

Firm exit,technological progress and trade

The dynamics of export market exit and firm closure have found limited attention in the new heterogeneous-firms trade literature. In fact, several of the predictions on firm survival and exit stemming from this new class of models are at odds with the stylized facts. Empirically, higher productivity firms survive longer, most firm closures are young firms, higher productivity exporters are more likely to continue to export compared to less productive exporters and market exits as well as firm closures are typically preceded by periods of contracting market shares. The present paper shows that the simple inclusion of exogenous economy wide technological progress into the standard Melitz (2003) model generates a tractable dynamic framework that generates endogenous exit decisions of firms in line with the stylized facts. Furthermore, we derive the effects of faster technological progress and trade liberalization on export market exit and firm closure.     

Politico-economic inequality and the comovement of government purchases

This paper explores the implications of economic and political inequality for the comovement of government purchases with macroeconomic fluctuations. We set up and compute a heterogeneous-agent neoclassical growth model, where households value government purchases which are financed by income taxes. A key feature of the model is a wealth bias in the political aggregation process. When calibrated to U.S. wealth inequality and exposed to aggregate productivity shocks, such a model is able to generate weaker positive comovement of government purchases than models with no political wealth bias. The wealth bias that matches the cross-sectional campaign contribution distribution by income is consistent with the mild positive comovement of government purchases in the aggregate data. We thus provide an empirically relevant example where economic and political heterogeneity matter for aggregate dynamics.     

Enlarging the EU: How can the costs be minimised?

Enlargement of the EU will be associated with many costs for all participants— the prospective new members, the old memebers and the EU institutions. A strategy should be pursued that reduces the economic costs as far as possible. This implies a postponement of enlargement until the conditions are more favourable. The author would like to thank Prof. El-Shagi El-Shagi and Dr. Dorothea Witter-Rieder for helful comments on an earlier draft of this paper.     

Hedge funds and financial stability: Regulating prime brokers will mitigate systemic risks

We review key characteristics of the hedge fund industry, and identify conditions under which this sector can pose a threat to financial stability. Direct regulation of hedge funds that increases transparency does not appear feasible, may create a moral-hazard problem, and may reduce market liquidity. Indirect regulation by prime brokers and market discipline by creditors, counterparties, and investors have been effective in limiting the risks from the hedge fund sector. To reduce systemic risks, more regulation of prime brokers is warranted to avoid competitive dynamics from undermining counterparty risk management practices.