A Perpetual Race to Stay Ahead

This paper presents a model of dynamic competition between two firms that repeatedly engage in an innovative activity. The state of competition—measured by the difference between the number of innovations introduced by the firms—evolves stochastically according to their effort level. The structure of Markov perfect equilibria is identified. It is generally not true that competition is fiercest when firms are closest. Rather, firms invest under two distinct circumstances: while sufficiently ahead, to outstrip their rival and secure a durable leadership; while behind, to regain leadership and prevent the situation from worsening to the point where their rival outstrips them.     

Protection for sale with imperfect rent capturing

Abstract .  Grossman and Helpman (1994) explain tariffs as the outcome of a lobbying process. In most empirical implementations of this framework protection is instead measured using non-tariff barriers. Since tariffs allow the government to fully capture the rents from protection, while non-tariff barriers do not, the existing parameter estimates of the protection for sale model are likely to be biased. To address this problem, we augment the framework by considering instruments that allow partial capturing. Our specification is supported by the data, where we find that only 72–75% of the rent from protection is appropriated by the government.     

HOW INCOME INEQUALITY CHANGED IN GERMANY FOLLOWING REUNIFICATION: AN EMPIRICAL ANALYSIS USING DECOMPOSABLE INEQUALITY MEASURES

This paper analyzes how inequality in Before and After Government income has changed in Germany since reunification using the 1990 through 1992 waves of the German Socio-Economic Panel. A Theil decomposable inequality index is used to measure inequality in Germany and in its eastern and western states. Massive public transfers from west to east have narrowed the east-west income gap, substantially offset the rise in income inequality from private sources, and lowered overall inequality in the western states. The net result of this policy has been a drop in After Government income inequality in Germany between 1990 and 1992.     

Bestimmung kostenoptimaler Parameter für den kontinuierlichen Stichprobenplan vonDodge

Summary Dodge's sampling plan for a continuous production process is determined by two constantsi andk. Under some assumptions about the statistical properties of the production process the average loss due to the costs for inspection and for replacing defective units by good ones is described by a loss function. It is shown that there are always constantsi andk which minimize the loss function in a special sense. Tables of these optimum parameters are computed.     

Pension Reform, Capital Markets and the Rate of Return

Abstract. This paper discusses the consequences of population aging and a fundamental pension reform – that is, a shift towards more pre‐funding – for capital markets in Germany. We use a stylized closed‐economy, overlapping‐generations model to compare the effects of the recent German pension reform with those of a more decisive reform that would freeze the current pay‐as‐you‐go contribution rate and thus result in a larger funded component of the pension system. We predict rates of return to capital under both reform scenarios over a long horizon, taking demographic projections as given. Our main finding is that the future decrease in the rate of return is much smaller than often claimed in the public debate. Our simulations show that the capital stock will decrease once the baby‐boom generations enter retirement, even if there were no fundamental pension reform. The corresponding decrease in the rate of return, the direct effect of population aging, is around 0.7 percentage points. While the capital market effects of the recent German pension reform are marginal, the rate of return to capital would decrease by an additional 0.5 percentage points under the more decisive reform proposal.     

Retrospective questions: data quality,task difficulty,and the use of a checklist

Data from a national panel study with waves in 1987 and 1991 (N=1257), present evidence of the low accuracy of responses to retrospective questions, concerning both attitudes and behaviour. Applying a split ballot design, it is investigated whether using a checklist improves the response accuracy for a retrospective question about one single event: how respondents (N=363) did obtain the job they had four years ago. Furthermore interaction effects of ‘task difficulty’ are examined. The response accuracy indeed increases by using a checklist; however, this increase is not statistically significant. The expected increase of the checklist effect with higher ‘task difficulty’ appears for longer recall intervals, but not for more frequent changes of jobs. It turned out that for male respondents all the predicted effects are indeed clearly present. But for female respondents the checklist appeared to have no effect, irrespective of the task difficulty. A tentative explanation for this unexpected gender effect is suggested by pointing at indications that the male and female respondents differed in the way they obtained their job.     

EEC action in regard to consumer safety,particularly in the food sector

The paper discusses trends and actions of the European Economic Community (EEC) in the field of consumer safety. EEC law has no fast principle of consumer safety nor special agencies responsible for it. EEC actions are restricted to specific measures, especially in the area of foodstuffs (additives, colouring agents etc.). EEC law suffers a number of deficiencies. There is — with the exception of pharmaceutical products — no regulation on EEC-wide market withdrawals. Member state safety decisions may be in conflict and put strain on the EEC principle of free movement of goods. Certain directives contain only minimum standards and therefore do not make for common safety regulations in the EEC. There are gaps in the information exchange systems among the EEC and member states even though an EEC decision of 1984 improved the situation. The author goes on to make some suggestions for future action.

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Gemeinschaftsaktionen zugunsten der Sicherheit des Verbrauchers unter besonderer Berücksichtigung des Lebensmittelrechts

Zusammenfassung Die Europäischen Gemeinschaften (EG) haben nur begrenzte Kompetenzen im Bereich der Verbrauchersicherheit. Deshalb ist dem EG-Recht ein allgemeines Prinzip unbekannt, das die Sicherheitsinteressen des Verbrauchers produktunabhängig schützt. Vielmehr geht die EG problembezogen vor; das Einstimmigkeitsprinzip und die fehlende Öffentlichkeit erzwingen eine Beschränkung auf sehr konkrete und sehr spezifische Maßnahmen. Umfängliche Regelungen gibt es vor allem im Bereich von Lebensmitteln, insbes. hinsichtlich von Zusatzstoffen.Das EG-Recht weist eine Reihe von Lücken auf. Es fehlt — bis auf die Ausnahme der Arzneimittel — eine Regelung über den Rückruf von Produkten. Konflikte zwischen dem freien Warenverkehr und mitgliedstaatlichen Schutzinteressen aus Gründen tatsächlicher oder vermeintlicher Verbrauchersicherheit sind an der Tagesordnung. Der Informationsaustausch über Produktrisiken ist unzureichend; eine entsprechende Gemeinschaftsinitative erfaßt nicht freiwillige Maßnahmen.Der Beitrag erörtert schließlich die Möglichkeiten für künftige Gemeinschaftsaktionen.The paper is a slightly changed and updated version of a paper given at a seminar in Paris on 8 November 1983, organized by the Association Française pour le Droit de l'Alimentation and dealing with safety and food.

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Ludwig Krämer works at the EC Commission, Directorate General XI (Environment, Consumer Protection, and Nuclear Safety), 10 rue Guimard, B-1049 Brussels, Belgium. The views expressed in this paper are purely personal.