Simulating Discount-Pricing Strategies for the GSM-Mobile Market

The article analyzes network effects on the German GSM mobile telephony market. The authors use an ACE-approach to examine how a new competitor can successfully gain ground in the market with a discount-pricing strategy. In particular they study the impact of several elements of a mobile phone contract like on-net-, landline- or off-net-fees on the competitor’s market share. It turns out that it is possible to successfully enter the market with a prepaid contract using a discount-pricing strategy where the single fees only marginally exceed the termination rates, which have to be transferred to foreign network operators. Accepted after one revision by Prof. Dr. Buhl. This article is also available in German in print and via http://www.wirtschaftsinformatik.de: Schade S, Frey T, Mahmoud N (2009) Simulation von Diskontpreis-Strategien im GSM-Mobilfunkmarkt. WIRTSCHAFTSINFORMATIK. doi: 10.1007/11576-009-0178-6.     

Sunspot equilibria and the transfer paradox

Summary. We show that for international economies with two countries, in which agents have additively separable utility functions, the existence of sunspot equilibria is equivalent to the occurrence of the transfer paradox. This equivalence enables us to provide some new insights on the relation of the existence of sunspot equilibria and the multiplicity of spot market equilibria.Received: 1 October 2003, Revised: 1 April 2004, JEL Classification Numbers: C62, D52, F3, F20, 012.Correspondence to: Thorsten HensWe would like to thank Anke Gerber for carefully checking and improving our arguments. Moreover, we are grateful to Piero Gottardi for his encouragement and his comments, to Andreu Mas-Colell and Mike Jerison for very fruitful discussions and to Klaus Schenk-Hoppé for his support in using . All remaining errors are ours.     

On the Double Dividend under Imperfect Competition

We investigate whether, and under which conditions, a revenue-neutral environmental tax reform may yield an employment double dividend, i.e., an improvement of environmental quality and an increase in aggregate employment. Using a model with two market imperfections – a rigid real wage and imperfect competition in one industry – we show that an employment dividend is plausibly obtained. However, for countries where labor taxes are high and households spend a large share of their income in favor of environmentally harmful consumption goods a double dividend can nevertheless not be obtained, for under these conditions environmental quality deteriorates.     

SMEs,Growth, and Poverty: Cross-Country Evidence

This paper explores the relationship between the relative size of the Small and Medium Enterprise (SME) sector, economic growth, and poverty alleviation using a new database on the share of SME labor in the total manufacturing labor force. Using a sample of 45 countries, we find a strong, positive association between the importance of SMEs and GDP per capita growth. The data do not, however, confidently support the conclusions that SMEs exert a causal impact on growth. Furthermore, we find no evidence that SMEs alleviate poverty or decrease income inequality.     

Optimal dynamic risk sharing when enforcement is a decision variable

Societies provide institutions that are costly to set up, but able to enforce long-run relationships. We study the optimal decision problem of using self-governance for risk sharing or governance through enforcement provided by these institutions. Third-party enforcement is modelled as a costly technology that consumes resources, but permits the punishment of agents who deviate from ex ante specified allocations. We show that it is optimal to employ the technology whenever commitment problems prevent first-best risk sharing and fixed costs are sufficiently low, but never optimal to provide incentives exclusively via this technology. Commitment problems then persist and the optimal incentive structure changes dynamically over time with third-party enforcement monotonically increasing in the relative inequality between agents.     

Two Games of Interjurisdictional Competition When Local Governments Provide Industrial Public Goods

In this paper we investigate two different games of interjurisdictional competition when local governments provide public goods that benefit industry. Governments play a game either in tax rates on mobile industrial capital or in public expenditures. Although the literature suggests that competition in public expenditures is more competitive than in tax rates, this is not necessarily true in the case of industrial public goods. Moreover, in the presence of industrial public goods interjurisdictional competition may also lead to overprovision of public services.     

Incentives for sales agents after the advent of the internet

E-commerce has siphoned sales away from bricks-and-mortar channels in many industries. Taking a principal-agent perspective, this article analyzes how the increasing volume of e-sales influences offline incentive schemes and firm profitability. According to the proposed model, moderate channel cannibalization can be a blessing in disguise if it decreases incentive intensity and lowers expected wage payments. Whether a larger volume of e-sales is blessing or curse depends (among other things) on the relative magnitude of cannibalization versus market enlargement and the degree to which the increase changes the composition of offline customers’ types with respect to service costs.

Policyholder Exercise Behavior in Life Insurance: The State of Affairs

The article presents a review of structural models of policyholder behavior in life insurance. We first discuss underlying drivers of policyholder behavior in theory and survey the implications of different models. We then turn to empirical behavior and appraise how well different drivers explain observations. The key contributions lie in the synthesis and the systematic categorization of different approaches. The article should provide a foundation for future studies, and we describe some important directions for future research in the conclusion.