Environmental Taxation and Vertical Cournot Oligopolies: How Eco-industries Matter

This article specifies what an optimal pollution tax should be when dealing with a vertical Cournot oligopoly. Polluting firms sell final goods to consumers and outsource their abatement activities to an environment industry. It is assumed that both markets are imperfectly competitive. Thus, the tax is a single instrument used to regulate three sorts of distortions, one negative externality and two restrictions in production. Consequently, the optimal tax rate is the result of a trade-off that depends on the firms’ market power along the vertical structure. A detailed analysis of Cournot-Nash equilibria in both markets is also performed. In this context, the efficiency of abatement activities plays a key-role. It gives a new understanding to the necessary conditions for the emergence of an eco-industrial sector.      

Employment and Wage Bargaining in an Open Monetary Union

This paper studies alternative patterns of wage bargaining in an open two-country monetary union. Wages are fixed by trade unions for two periods, either at the national or at the monetary union level. It is shown that the best solution with regard to unemployment depends on the nature of externalities and dynamic strategic interactions between the monetary union's countries; namely on the degree of openness of the monetary union, and the differentiation index between national goods.     

Bundesfinanzierung für Berlin — ein Patentrezept für den Finanzausgleich ab 2020?

The federal states Bavaria and Hesse have demanded a change in the system of financial equalisation among the German federal states. One of their demands is that Berlin, as the German capital, should not receive payments from the fiscally strong federal states but rather directly from the federal government. But there are no strong arguments for such a regulation, and it would be contradictory to the constitutional rules on public finance. Moreover, there are additional objections both from a financial and a political point of view which indicate that the proposal by Bavaria and Hesse will not be successful.