On the public provision of the performing arts

In this paper, we present a model in which the performing arts are modelled as congestible public goods. In accordance with empirical evidence, the production of seat capacity is assumed to be subject to fixed costs. We estimate the parameters of the model's demand and cost functions using German data. Using these estimates in a subsequent social choice analysis, we show that the current situation in the German performing arts sector is best described by a directorship that under the influence of a selfish theater lobby maximizes only the welfare of the spectators. Such an equilibrium, characterized by too low ticket prices and too large capacity, is most likely to establish if citizens have a very positive ex ante notion of the performing arts.     

On the Delegation of Powers: With Special Emphasis on Central and Eastern Europe

Elected politicians can choose to decide themselves or to delegate competence. Delegation can occur in the constitutional stage, but is most common in the post-constitutional stage. Furthermore, domestic delegation can be distinguished from international delegation. The authors propose to analyze both delegation decisions within a unified framework and apply it to eight countries of Central and Eastern Europe that have experienced substantial constitutional change recently. The main differences among these countries with regard to delegation are portrayed, their origins are traced and their effects analyzed.     

Uncertainty and sustainability in the management of rangelands

We analyze a dynamic and stochastic ecological-economic model of grazing management in semi-arid rangelands. The ecosystem is driven by stochastic precipitation. A risk averse farmer chooses a grazing management strategy under uncertainty such as to maximize expected utility from farming income. Grazing management strategies are rules about which share of the rangeland is given rest depending on the actual rainfall in that year. In a first step we determine a myopic farmer's optimal grazing management strategy and show that a risk averse farmer chooses a strategy such as to obtain insurance from the ecosystem: the optimal strategy reduces income variability, but yields less mean income than possible. In a second step we analyze the long-run ecological and economic impact of different strategies. We conclude that a myopic farmer, if he is sufficiently risk averse, will choose a sustainable grazing management strategy, even if he does not take into account long-term ecological and economic benefits of conservative strategies.     

OPPORTUNISTIC MATCHING IN THE HOUSING MARKET*

We construct a model of the housing market in which agents differ in their flow values while searching. Agents enter the market relaxed (with high flow values) but move to a desperate state (low flow values) at a Poisson rate if they have not already transacted. We characterize the equilibrium steady‐state matching pattern and the joint distribution of price and time to sale (for sellers). The expected price conditional on time to sale falls with time spent on the market, whereas the conditional variance of price first rises and then falls with time on the market.     

Zur Nachhaltigkeit der Generationenverträge: Eine Diagnose der Kranken- und Pflegeversicherung

Employing the generational accounting approach, this paper analyses the stance of fiscal policy in Germany. We find that fiscal policy is presently not sustainable, which is mainly due to pay-as-you-go financed social insurance systems. In order to illustrate the relative impact, we isolate the Public Health Insurance and the Public Long Term Care Insurance. Our findings suggest that without radical reforms the implicit debt burden for future generations might reach a magnitude of more than two times the annual GDP and contribution rates to both schemes will explode during the next three decades.     

Inequality, Crime and Economic Growth. A Classical Argument for Distributional Equality

This paper studies the dynamic general-equilibrium interactions between inequality, crime and economic growth by embedding the rational choice-theoretical approach to criminal behavior in a heterogeneous-agents endogenous-growth OLG model. Based on their respective opportunity costs, individuals choose to specialize in either legal or criminal activities. While legal households contribute to aggregate goods supply over time by either working or building human capital, criminals make a living by expropriating legal citizens of part of the latter's income. An increase in inequality lowers the economy's growth rate and possesses negative welfare effects for all agents with endowments equal to or above average and for agents with endowment below average that are born sufficiently far in the future.     

Constitutional concepts within the process of European integration

In order to come to an understanding concerning the questions surrounding the drafting of a European constitution, one must differentiate the three different meanings of the word ‘constitution’ by virtue of the very nature of its beginnings. The concept of a constitution in the organisational sense is the first possible way to understand the term. As such, ‘Constitution'is synonymous with the organizational founding statute of any association or collective. Separate from this is a second possible context of the term, which refers to the legal meaning of the word. Here, the expression is understood as the highest legal norm of an autonomous legal order, its first and highest law. Within both of these meanings, one can speak of a ‘European Constitution’. A third, political way of understanding the term refers to the concept of the constitution as an ordering idea, which a specific place to the internal and external independent political unity combines and which orders from the outside inward. In other words, with this is concerned the question, why exactly this specific space within these specific limits to the independent political unity should be combined/bound. The introduction of such an order upon which can be founded, why exactly this concrete space in the specific limits as independent unity should be constituted, is still not today found for Europe.     

Competitive balance and gate revenue sharing in team sports

This paper shows that under reasonable conditions, increasing gate revenue sharing among teams in a sports league will produce a more uneven contest, i.e. reduce competitive balance. This result has significant implications for antitrust authorities and legislators, who have tended to assume that revenue sharing arrangements will necessarily promote competitive balance.