Paradigm Shifts in Economic Theory and Policy

In most countries, mainstream economic policy has not yet undergone any significant change, and there is little consensus on what, if anything, ought to replace it. However, there are some signs of an emerging transition, at several levels.     

Carbon Trading with Imperfectly Observable Emissions

The Kyoto Protocol foresees emission trading but does not yet specify verification of (uncertain) emissions. This paper analyses a setting in which parties can meet their emission targets by reducing emissions, by investing in monitoring (reducing uncertainty of emissions) or by (bilaterally) trading permits. We derive the optimality conditions and carry out various numerical simulations. Our applications suggest that including uncertainty could increase compliance costs for the USA, Japan and the European Union. Central Europe and the Former Soviet Union might be able to gain from trading due to higher permit prices. Emissions trading could also lower aggregate uncertainty on emissions.     

Decentralized Evolutionary Mechanism of Growth in a Linear Multi-sector Model

The paper considers the following mechanism of intertemporal decisions in a linear multisector production model: at each time t a program for two time periods t, t + 1 is worked out but is followed only during the first period t, after which the rest of the program is replaced by a new two-period program for t + 1, t + 2, etc. Terminal conditions in these two-period programs are continually adapted to the current state. The result of the procedure, called an adaptive rolling plan, is shown to yield growth of production at the maximum rate over time which is a natural intertemporal optimality criterion for the production model. It is also demonstrated that adaptive rolling plans can be realized in a decentralized economy, and therefore they provide an intertemporally decentralized mechanism of achieving maximum growth.     

Regulierungsmöglichkeiten auf dem Markt für Online-Auktionen

Der deutsche Online-Auktionsanbieter eBay hat seit seiner Gründung seine Gebühren um ein Vielfaches erh?ht. Ist dies mit Kostensteigerungen zu begründen? Verh?lt sich eBay wie ein typischer natürlicher Monopolist auf einem schwer bestreitbaren Markt? Wie kann einer Marktkonzentration entgegengetreten werden? Wie k?nnte eine Regulierung des Marktes aussehen? Korbinian von Blanckenburg, 28, Dipl.-Volkswirt, ist wissenschaftlicher Mitarbeiter am Institut für Finanzwissenschaft der Westf?lischen Wilhelms-Universit?t Münster; Michael Michaelis, 31, ist Dipl.-Jurist.     

Do bookmakers possess superior skills to bettors in predicting outcomes?

In this paper we test the hypothesis that bookmakers display superior skills to bettors in predicting the outcome of sporting events by using matched data from traditional bookmaking and person-to-person exchanges. Employing a conditional logistic regression model on horse racing data from the UK we find that, in high liquidity betting markets, betting exchange odds have more predictive value than the corresponding bookmaker odds. To control for potential spillovers between the two markets, we repeat the analysis for cases where prices diverge significantly. Once again, exchange odds yield more valuable information concerning race outcomes than the bookmaker equivalents.