Crop Insurance as a Strategy for Adapting to Climate Change

Financial insurance for extreme events can play an important role in hedging against the implications of climate change. This paper combines a comprehensive estimation strategy and a unique panel dataset to study the role of financial insurance in farmers' welfare under uncertainty. Data are drawn from a large Italian farm panel dataset. We find that (i) demand for insurance products is likely to increase in response to climatic conditions, and (ii) that the use of insurance reduces the extent of risk exposure. We also find that farms growing more crops are less likely to adopt the insurance scheme. This confirms what is found in the theoretical literature. Crop diversification can be a substitute for financial insurance in hedging against the impact of risk exposure on welfare.     

Heavily regulated,but promising prospects: Entry in the German Express Coach Market

Domestic express coach services in Germany have long been heavily restricted by regulation, although offerings comparable to countries like, for example, Great Britain or Sweden bear substantial opportunities for competition, the environment, and mobility. In this paper, we motivate market entry in the German express coach market for local public and integrated transport companies by high profitability rates in other countries and the availability of bus facilities and skills. This is followed by the evaluation of supply and demand. Supply is represented by an analysis of external and internal costs showing that express coaches have significant cost advantages that are intensified by the possible internalization of external costs. Demand is represented by a survey of customers that is evaluated with a conjoint analysis. Our results suggest a market share for express coach services in Germany of at least 5.3%.     

IPO underpricing,signaling, and property returns

This paper investigates whether IPO signals reveal proprietary information about the prospects of an issuing firm’s underlying industry. By analyzing a sample of European property company (EPC) IPOs from 1997 to 2007, we take advantage of a heterogeneous set of industry performance measures, i.e., yields and total returns of direct property investments in various European property markets that can be clearly assigned to each individual IPO. The results reveal that the main signal of interest, underpricing, is in fact positively related to average property yields for a 12-month post-IPO period; a result that supports our assumption. Other signals, as proposed in previous research, do not appear to contain any information about the prospects of the IPO firm’s target property investment market. We also show that total returns seem to be a biased measure for direct property performance. Further tests for the signaling model’s preconditioned presence of information asymmetry among EPCs reveal that underpricing levels are a function of company-specific ex ante uncertainty proxies. In contrast, property-specific ex ante uncertainty proxies do not explain underpricing levels.     

Design and regulation of balancing power auctions: an integrated market model approach

Journal of Regulatory Economics - We present an integrated market model which considers the dependencies between the wholesale market and the highly regulated balancing power markets. This fosters...     

The impact of trade agreements on world export prices

This paper uncovers new stylized facts on the relation between economic integration and world trade prices. Using free on board export price data for the universe of manufacturing products, we show that a country's membership in the WTO (World Trade Organization) or in a PTA (Preferential Trade Agreement) is associated with an increase in export prices of differentiated goods. For the WTO, this effect is captured by the countries that were subject to rigorous WTO accession procedures. We also exploit the importance of the depth of a PTA and of its different provisions. Whereas the effect of the depth per se is not significant, individual provisions evoke distinct effects on prices. In particular, we find that PTAs with provisions on investments are associated with higher export prices. The results are consistent with theoretical models that relate competition to the innovation behavior of firms.     

The law and economics of sycophancy

Tullock (in: Rowley (ed) The selected works of Gordon Tullock, Liberty Fund, Indianapolis, pp 399–455, 2005) was skeptical of the presumed economic efficiency of the common law, as adversarialism, apparently inherent to common law procedures, allowed for and was prone to litigiousness. Common law litigations accord to patterns of rent-seeking, as litigants invest ever more resources to assure victory. This paper asks if viable institutional solutions can emerge to resolve the problem Tullock identified. I survey the historical development of the term sycophancy within ancient Greek law as a revealing case study. Though a relatively innocuous pejorative in contemporary parlance, the term’s etymological roots stem from a formative process of ancient legal and institutional change within Athenian Greece. In the wake of specific legal reforms that expanded the scope of governmental authority under Solon (born 638–558 BCE), citizens were given explicit financial incentive to report violators of newly implemented public laws. Thereafter, social stigma surrounding third party legal representation leveraged the term sycophancy in reference to prosecutors motivated by private interests over the public welfare. Forgone social status and eventually formal criminal sanction emerged as offsetting differentials against the incentives of sycophancy.