Do city–county mergers in China promote local economic development?

Municipal mergers have become a worldwide phenomenon in the past few decades, primarily advanced to exploit economies of scale. While most evaluations of municipal mergers have focused on the efficiency of local public goods provision, it is rare in the literature to explore how such mergers promote economic growth in a developing country context. This research investigates the economic consequences of a policy experiment of city–county mergers (che xian she qu) in China during the period 2000–2004. Using comprehensive datasets at city, county and firm levels, we present evidence that the merger significantly increases local economic development, and the magnitude of the effect depends on local endowments related to agglomeration forces. The results are robust to a number of different model specifications. We further verify that improved transport infrastructure and urban agglomeration economies after merger are potential contributors to the positive merger effects.     

Social Learning in Beauty‐Contest Games

We study the impact of social learning on the depth of reasoning in an experimental beauty‐contest game. Naive advice and observation of others' decisions as two forms of social learning trigger faster convergence to the equilibrium. We find that subjects who receive advice outperform uninformed subjects permanently, whereas subjects who observe others' past behavior before making their decision only have a temporary advantage over uninformed subjects. A series of control‐treatments and simulations indicate that the latter result is due to subjects failing to make the most out of observing others.     

Dissipative Competition: Evidence from a Quasi‐Natural Experiment

We document that contrary to the conventional view, the costs of domestic firms in terms of selling, general and administrative expenses and cost of goods sold increase significantly following exogenous shocks that increase competition, namely material import tariff cuts affecting US manufacturing industries over the period 1974–2005. Incompatible with an agency explanation, the cost increase is more pronounced among firms with higher CEO/insider/board ownership. We further find that the cost increase is more evident among firms with smaller market share and among focused firms. Generally, our results are consistent with the notion of ‘dissipative competition’ discussed in the seminal papers by Tullock.     

EQUALITY OF OPPORTUNITY: EAST VS. WEST GERMANY

The case of German reunification has been subject to extensive research on earnings inequality and labour market integration. However, little is known about the development of equality of opportunity (EOp) in East and West Germany after 1990. Using German micro data, we empirically analyse how circumstances beyond the sphere of individual control relate to inequality in East and West Germany. Our results show that EOp is larger in East than in West Germany. However, despite increasing income inequality, EOp remained surprisingly constant.     

Estimating the gravity model when zero trade flows are frequent and economically determined

ABSTRACT

Since the 1950s, we have known that the presence of zero-valued dependent variables can seriously bias econometric estimates whether the zeros are included or excluded. Yet the widely-used gravity model is frequently estimated on samples that include large fractions of zeros. An influential paper by Santos Silva and Tenreyro – based on simulations that include no economically-determined zeros – concludes that the bias problems resulting from zeros and those resulting from heteroscedasticity and nonlinearity can be solved using the Poisson Pseudo-Maximum-Likelihood (PPML) model including the zero values. This paper begins by adapting the Santos Silva and Tenreyro experimental design to include economically-determined zeros to see whether this conclusion continues to hold. With this design, it finds that alternative estimators have lower bias than PPML. Changing to a Monte Carlo design that replicates the much-higher real-world frequency of predicted values near zero restores the finding of lower bias with the PPML estimator. The results highlight the need for very careful design of Monte Carlo experiments when evaluating alternative estimators of the gravity model.     

The So-Called 2015 Migration Crisis and Euroscepticism in Border Regions: Facing Re-Bordering Trends in the Danish–German Borderlands

ABSTRACT

This paper examines the role of Euroscepticism on regional cross-border cooperation between Germany and Denmark. It demonstrates that Euroscepticism, while absent from local mainstream politicians, had already caused civic unrest in the 1997 attempts to construct a return to history Euro-region Schleswig. It resulted in a re-scaling of the Euro-Region to Region and Schleswig to “Sønderjylland/Schleswig”, omitting any reference to Europe, European identity or a commitment to a closer European union in the relevant agreements. Border controls, on the agenda in 2011 and again since 2015, have demonstrated the institutional weakness of cross-border politics when faced with determined initiatives from the national center. Furthermore, the Eurosceptic Danish People’s Party had its best results in the border precincts both at the latest European and Danish national elections. Euroscepticism, even though difficult to measure on a regional level, seems to have been an ever present underneath current despite a political rhetoric of successful cooperation and cross-border reconciliation. The Danish-German case’s development might be more distinct, but nonetheless representative for European border (and cross-border) regions. While European metropolises develop into thriving cosmopolitan post-nation state societies, this is not necessary the case at Europe’s borders, where categorization and bordering remain common social practices by the large majority of national borderlanders with only a small portion of transnational borderlanders or ‘regionauts’ getting involved in border crossing social practices on a larger scale.     

The marketing of love: how attachment styles affect romantic consumption journeys

Journal of the Academy of Marketing Science - The experience of romantic love is closely interlocked with consumption journeys—yet how and why consumers engage in romantic consumption is not...     

The evolution of morality and the end of economic man

1871 saw the publication of two major treatises in economics, with self-seeking economic man at their center. In the same year Darwin published The Descent of Man, which emphasized sympathy and cooperation as well as self-interest, and contained a powerful argument that morality has evolved in humans by natural selection. Essentially this stance is supported by modern research. This paper considers the nature of morality and how it has evolved. It reconciles Darwin’s notion that a developed morality requires language and deliberation (and is thus unique to humans), with his other view that moral feelings have a long-evolved and biologically-inherited basis. The social role of morality and its difference with altruism is illustrated by an agent-based simulation. The fact that humans combine both moral and selfish dispositions has major implications for the social sciences and obliges us to abandon the pre-eminent notion of selfish economic man. Economic policy must take account of our moral nature.     

Are stricter investment rules contagious? Host country competition for foreign direct investment through international agreements

We argue that competitive diffusion is a driver of the trend toward international investment agreements with stricter investment rules, namely defensive moves of developing countries concerned about foreign direct investment (FDI) diversion in favor of competing host countries. Accounting for spatial dependence in the formation of bilateral investment treaties and preferential trade agreements that contain investment provisions, we find that the increase in agreements with stricter provisions on investor-to-state dispute settlement and pre-establishment national treatment is a contagious process. Specifically, a developing country is more likely to sign an agreement with weak investment provisions if other developing countries that compete for FDI from the same developed country have previously signed agreements with similarly weak provisions. Conversely, contagion in agreements with strong provisions exclusively derives from agreements with strong provisions that other FDI-competing developing countries have previously signed with a specific developed source country of FDI.