Against a General Theory of Populism: The Case of East-Central Europe

Intereconomics - Social science, like all other sciences, is supposed to explore the substance below the surface of things. However, populism discourse in general is stuck on the surface, focusing...     

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Reforming the EU Emissions Trading System: An Alternative to the Market Stability Reserve

Prices for emission allowances in Europe’s Emissions Trading System (ETS) have remained low for many years. This has given rise to controversies on whether there is a need for a fundamental reform of the ETS. Potential reform proposals include the introduction of a price fl oor for certifi cates and a market stability reserve, which is a rule-based mechanism for steering the market volume of allowances and is the preferred approach of the European Commission. In this article, we instead recommend retaining the ETS and suggest correcting past mistakes by a single intervention.     

(Un)expected Bidder Behavior in Spectrum Auctions: About Inconsistent Bidding and Its Impact on Efficiency in the Combinatorial Clock Auction

The combinatorial clock auction is a two-stage auction format, which has been used to sell spectrum licenses worldwide in the recent years. It draws on a number of elegant ideas inspired by economic theory. A revealed preference activity rule should provide incentives to bid straightforward, i.e., consistent with the bidders’ valuations on a payoff-maximizing package, in each round of the clock phase. A second-price rule should set incentives to bid truthfully in both phases. If bidders respond to these incentives and bid straightforward in the clock phase and truthful in the second sealed-bid stage, then the auction is fully efficient. Unfortunately, bidders might neither bid straightforward in the clock phase nor truthful on all packages in the second sealed-bid stage due to strategic reasons or practical limitations. We introduce metrics based on Afriat’s Efficiency Index to analyze straightforward bidding and report on empirical data from the lab and from the field in the British 4G auction in 2013 and the Canadian 700 MHz auction in 2014, where the bids were made public. The data provides evidence that bidders deviate significantly from straightforward bidding in the clock phase, which can restrict the bids they can submit in the supplementary phase. We show that such restrictions can have a significant negative impact on efficiency and revenue.     

Die Bestimmung von individuellen Effizienzvorgaben — Alternativen zum Best-of-Four-Verfahren

The setting of the individual X-factor is a core element of every incentive regulation system. The problem faced by the regulator is the choice among a wide variety of methods for setting the individual efficiency objectives. So far no single method could achieve acceptance as best-practice in both scientific research and regulatory practice. The German incentive regulation, which started in January 2009, uses the so called “Best-of-Four Method” to define individual X-factors. The regulator, the Bundesnetzagentur, announced an in-depth evaluation of this method, because it potentially leads to an unacceptable downward bias in setting the individual efficiency objectives. This article illustrates the problems of the Best-of-Four Method and offers alternatives. The author additionally develops a new approach which is based on a multi-stage process, using economical and engineering methods. Finally all alternatives are compared according to various criteria.It can be shown that the complementary usage of Data Envelopment Analysis and Stochastic Frontier Analysis is a reasonable approach to efficiency analysis. But this raises the question how to transform the resulting efficiency scores into individual X-factors. The Best-of-Four Approach is not appropriate because it distorts the X-factors, offers possibilities for strategic behaviour and cannot guarantee comparability of the efficiency objectives. Comparing alternatives shows that no approach clearly dominates all others taking into account all considered criteria. The multi-stage approach offers a possibility of transforming a “Nordic Walking” into an ambitious fitness program while also setting appropriate and comparable individual X-factors.     

Pseudolikelihood estimation of the stochastic frontier model

Stochastic frontier analysis is a popular tool to assess firm performance. Almost universally it has been applied using maximum likelihood (ML) estimation. An alternative approach, pseudolikelihood (PL) estimation, which decouples estimation of the error component structure and the production frontier, has been adopted in both the non-parametric and panel data settings. To date, no formal comparison has yet to be conducted comparing these methods in a standard, parametric cross-sectional framework. We produce a comparison of these two competing methods using Monte Carlo simulations. Our results indicate that PL estimation enjoys almost identical performance to ML estimation across a range of scenarios and performance metrics, and for certain metrics, outperforms ML estimation when the distribution of inefficiency is incorrectly specified.     

Zahlungsbereitschaft für grünen Strom: Zunehmende Kluft zwischen Wunsch und Wirklichkeit

This paper presents evidence on preferences for green electricity, drawing on two stated-preference surveys conducted in 2013 and 2015 among 6000 households. It uncovers a strong contrast between the households – rising general acceptance of supporting renewable energy technologies and their shrinking individual willingness-to-pay for green electricity.